JK 





Glass, 
Book. 



66th Congress, } SENATE. J Report 

M Session, j ( No. 336. 



UNITED STATES HOUSING CORPOEATION. 



December 16 (calendar day, December 18), 1919. — Ordered to be printed. 



Mr. Fernald, from the, Committee on Public Buildings and Groimds, 
submitted the following 

, REPORT 

^ [Pursuant to S. Rea. 210.] 

The Committee on Public Buildings and Grounds who were directed 
by a Senate resolution of October 11, 1919, to investigate and report 
to the Senate concerning the costs, construction, and maintenance 
of public buildings of the Government, their location and the plan 
of the Government as to their future dis])osition, ha"\'e completed 
their investigation and submit herewith a complete report together 
with the recommendation of your committee. 

Your committee has investigated the cost of public buildings, but 
in so investigating limited its activities to the affairs of the United 
States Housing Corporation, which, during the war period, has been 
the agency most active in the construction of public buildings. 

The United States Housing Corporation was created to exercise the 
powers granted the President by Public No. 149, Sixty-fifth Congress, 
as amended, and to administer the appro])riation of $100,000,000 
made therein. 

Pursuant to the authority of the foreo;oing resolution, the com- 
mittee engaged Mr. George B. Logan, of the hrm of Cobbs & Logan, 
of St. Louis, as its counsel, and Mr. Logan and his assistants began 
work the latter part of July, 1919. 

In the investigation which followed the committee or its counsel 
or assistants visited five projects of the Housing Corporation; care- 
fully examined all of the official reports of the Housing Cor})oration; 
as well as statements submitted to the committee at its request; 
read voluminously in newspaper and magazine articles and other 
works on industrial housing; carefully studied the previous testimony 
of every person who had appeared in relation to this subject before 
any of the Congressional committees; caused a penny-accurate audit 
to be made of the original vouchers, receipts, pay rolls, and ])ills on 
five large construction projects; examined many of the original books 
of the Housing Corporation; studied the invitations for bids, grading 



2 UITITED STATES HOUSING CORPOKATIOF. 

of contractors, awarding of contracts, the contracts and specifica- 
tions on 22 projects; read a vast amount of digested correspondence 
relative to the initiating of each of these 22 projects; caused its 
auditors to analyze many financial statements required from the 
corporation by the committee; studied the detailed appraisals of 
all real estate purchased, and interviewed the individual members of 
appraisal committees in three different cities; studied contracts of 
51 architects and approximately 60 engineers and town planners, and 
interviewed informally many other architects, contractors, and sub- 
contractors, as well as occupants of Government houses. 

The committee subpoenaed before it at public hearings for exhaus- 
tive examination by its counsel the former president, general manager, 
manager of construction division, manager of operating division, 
manager of the real estate division, manager of homes registration 
division, equipment engineers, field auditors and other former em- 
ployees of the Housing Corporation. Also the present president, 
vice president, manager real estate division, manager sales divi- 
sion, manager operating division, manager women's hotels, as well 
as contractors, field clerks, estimators and others. 

After four months of such an intensive study, the committee 
reports the following established propositions : 

FINDINGS. 

1. The original act provided that houses erected by the Government should be 
only of a temporary character, except where the interests of the Government would be 
best subserved by buildings of a permanent character. The Housing Corporation 
officials consistently made the exception the rule and erected practically all buildings 
of permanent character. (See discussion on point 1, this report p. 5 to p. 6 inclusive). 

2. Speed was the chief aim in emergency housing. Time was of the essence in all 
contracts. The first single residence was occupied January 1, 1919, at Niles, Ohio 
2 months after the armistice; 6 months after the creation of the Housing Corporation; 
8 months after the passage of the appropriation act; 11 months after the creation of 
the Bureau of Transporation and Housing in the Department of Labor. (See discus- 
sion on point 2, this report p. 6 to p. 7 inclusive.) 

3. Emergency war housing was construed to include electric door openers, recrea- 
tion parks, hot-water heating systems in Virginia, and the furnishing of tenants with 
kitchen ranges, kitchen cabinets, patent slate wash tubs, and patent clothes dryers 
ready equipped with ropes. 

Garages were built at Government expense at Vallejo, Calif., as an adjunct to the 
housing and were planned for at Erie, Pa., and Seven Pines, Va., and other projects 
(See discussion on point 3, this report p. 7 to p. 9 inclusive.) 

4. The specifications of house and surroundings required a joint agreement of the 
architect, the engineer and the town planner ,and undoubtedly is responsible beyond 
other reasons for the failure to deliver completed housing. Conferences between 
members of this triangular force resulted in frequent changes, alterations, and delays. 
The street plan of one project was redrafted seven times to obtain the correct curve 
of street and "orientation" of blocks. (See discussion^on point 4, this report p. 10.) 

5. Single residences in Bridgeport, Conn., cost $7,263 each. The average for all 
houses was $5,673.78. (See discussion on point 5, this report, p. 10 to p. 11, inclusive.) 

6. The direction of Congress to use the office of the Supervising Architect of the 
Treasury Department was ignored. This cost the Government at least $200,000. 
(See discussion on point 6, this report, p. 11 to p. 14, inclusive.) 

7. Fifteen out of 51 architects employed by the Housing Corporation were from 
New York City. New York architects were employed for work in Norfolk, Va. New 
York architects were employed for work in Erie, Pa. New Orleans architects were 
employed for work in Charleston, S. C. A town planner from Brookline, Mass., was 
employed to design the project at Vallejo, Calif. The Government paid all traveling 
and incidental expenses. 

D« Ot «• 

M^ 2Q 1920 



K9y 






, . TTNITED STATES HOUSIITG COEPOTtATTOTT. 

8. The prohibition against cost-plus percentage contracts contained in the appro- 
priation act was ignored in architects' contracts. The architects were paid actual 
drafting expenses plus 100 per cent for "overhead." For each additional dollar 
spent in drafting expense the architects received an additional dollar for "overhead." 
Over $202,000 was paid architects under this provision. It opened the way to slow- 
ness of execution and to excessive and exorbitant rates. The committee does not 
charge the architect ^vith so doing, but the method of payment was a violation of the 
language of the appropriating act. Civil suit should be brought against the architects 
to recover these sums, less, of course, the actual overhead. The committee believes 
that more than $50,000 can be recovered for the Government'in this manner. (See 
discussion on point 8, this report, p. 14 to p. 15, inclusive.) 

0. One architect who had many Government projects earned more than twice as 
much during his war service than his usual earning capacity, and also earned many 
thousands more than reported in his income-tax returns. This fact was discovered by 
the committee's investigator, and upon being communicated to the architect a cor- 
rected income-tax return was immediately made on which the Government, for the 
years 1917 and 1918, will receive an additional tax of $6,484.98. (See discussion on 
point 9, this report, p. 15 

10. Bids were never publicly opened. No one whose bid had been rejected knew 
what the proposal of the successful bidder was. Nor was the successful bidder held 
to a compliance with the important estimates upon which the contract was awarded. 
(See discussion on point 10, this report, p. 16 to p. 19, inclusive.) 

11. One of the general contractors of the Housing Corporation made a secret profit 
of $16,028.20 in subletting teaming and trucking on the women's dormitories in Wash- 
ington. This profit was contrary to the letter of Avritten proposal, contrary to the 
spirit of the contract, and entirely subversive of the fiduciary relationship of agency 
between the contractor and the Government. It was unjustifiable and can be recov- 
ered by civil suit. Officials permitted this profit to be continued after discovery. 
(See discvission of point 11, this report, p. 19 to p. 21, inclusive.) 

12. The Housing Corporation has paid out hundreds of thousands of dollars for con- 
struction "extras." Many of these extras are called for in the contract and were not 
entitled to extra payment. Many of them were allowed in excess of the detailed fig- 
ures of the Housing Corporation estimating division, which figures, the committee 
finds, were in many instances effaced from the record when the larger sums were 
allowed. Many of these extras were "O. K'd." by the estimators but the figures are 
no longer in existence. On the women's dormitories in Washington alone, in the 
judgment of the committee, more than $30,000 was paid to the subcontractors which 
should not have been paid. The making of these payments indicates a willingness to 
substitute the contractor's demands for the estimating division's judgment. This 
sum should be recovered by civil suit. (See discussion of point 12, this report, p. 22 
to p. 24, inclusive.) 

13. The Housing Corporation made a loan of $500,000 to the Springfield Consoli- 
dated Water Co., of Philadelphia, upon the recommendation of the chief engineer of 
the Housing Corporation who had twice been a paid expert witness for the water 
company. This fact, the president of the Housing Corporation originally testified, 
was unknown to him, and would have affected his judgment had he known it, but 
correspondence between the water company and the president indicated that he 
did know. 

Not only was the loan unjustifiable under the point of financial security offered, 
but although expressly made for the purpose of financing future improvements the 
Housing Corporation reimbursed the water company out of the proceeds of this loan 
for $54,522 of old bills of the water company, which had accrued and which had been 
paid by the water company prior to the date of the loan. This amount should be 
repaid at once to the United States. (See discussion of point 13, this report, p. 25 
to p. 27, inclusive.) 

14. A failure to promptly cease building operations on the signing of the armistice 
proved either a desire to complete its "town beautiful" experiments or to be help- 
ful, at Government expense, to the local communities involved. The Crane tract at 
Bridgeport was one-half of 1 per cent completed on November 6, 1918, yet it was 
completed by the Housing Corporation at a cost of $1,371,839.90. Ninety-two of these 
houses were still vacant in September, 1919. The Philadelphia project was only 6 
per cent completed on the date of the signing of the armistice, but was finished by the 
Housing Corporation at a cost of $3,406,000. These two transactions cost the Govern- 
ment not less than $1,450,000. (See discussion of point 14, this report, p. 27 to p. 
28, inclusive.) 

15. The women's dormitories in Washington are self-supporting not accounting, 
however, for any interest on the Government's investment or depreciation in value 



4 UNITED STATES HOUSING COEPORATION. 

of Government property or proper maintenance of the original equipment. The oper- 
ation of the women's hotels in Washington by the Government is in effect giving the 
young women fortunate enough to be housed therein an advantage of at least $5.50 a 
month each, which is a sum which would be necessary to properly cover interest and 
depreciation on the estimated present value, computing the buildings at 25 per cent 
and the furniture at 50 per cent of their respective cost. (See discussion of point 15, 
this report, p. 29 to p. 31, inclusive.) 

16. A serious shortage has occurred already in the inventory of nonexpendable 
property at these dormitories. Personal culpability can not be fixed by the com- 
mittee as no receipt was required of any individual for furniture and other similar 
articles delivered to these buildings. The present apparent shortage is approxi- 
mately $11,968.68. The futile inefficiency of the system which would permit of 
1375,000 worth of furniture to be handled without any personal responsibility is too 
obvious to need further comment. (See discussion of point 16, this report, p. 31.) 

17. Certain officials in the Housing Corporation have in the past made material 
misstatements in their official reports to Congress and in their testimony before the 
congressional committees. These are set forth in detail hereafter. (See discussion of 
point 17, this report, p. 31 to p. 38, inclusive.) 

18. The attitude of the present officials of the Housing Corporation toward the in- 
vestigation was not helpful. Although outwardly expressing a desire to give the com- 
mittee all assistance, the committee and its investigators were frequently confronted 
with obstacles in their work. As one of the officials in the Housing Corporation 
stated, they were careful to give the committee just exactly what it asked for and no 
more, to prevent the committee from gaining "new leads." 

The officials of the Housing Corporation now in office are not responsible for the 
policies of the Housing Corporation heretofore criticized. Had they been less com- 
mitted to the theory that their predecessors were infallible their present efforts to 
wind up the affairs of the corporation would be more appreciated. Those who created 
the policies of the Housing Corporation left its organization shortly after the armistice. 
(See discussion of point 18, this report, p. 38 to p. 39, inclusive.) 

19. The fiscal records of the Housing Corporation are in a serious state. Exact 
statements can not be obtained. The "balance sheet" is at least 60 days behind. 
Many assets and liabilities have never been shown on the books. (See discussion of 
point 19, this report, p. 39 to p. 41, inclusive.) 

20. The program of the Housing Corporation was vast in its extent. The Govern- 
ment, if the armistice had not intervened, would undoubtedly have been committed 
to a tremendous liability far beyond its original appropriation. 

The officials of the corporation deny their intention to let contracts beyond the 
limit of appropriation. Howei^er, their "program" on sites already planned con- 
templated housing 21,005 families, which at an average cost of 15,673.78 would alone 
have cost 1119,177,748.90. They planned also accommodations for 11,132 single 
women and 12,865 single men. Based on the housing cost in Washington of $1,542.50 
each for women and $685.95 each for men would have involved a further expenditure 
of $25,995,856.75, making a total of $145,173,605.65. (See discussion on point 20, 
this report, p. 41 to p. 42, inclusive.) 

21. Real estate men employed as "negotiators" in the purchase of real estate and 
whose work has been described as "patriotic" received compensation at the rate 
of $50 per day and expenses. (See discussion on point 21, this report, p. 42.) 

22. Not all of the activities of the Housing Corporation were inefficiently con- 
ducted. Certain divisions were very capably handled. _ We mention these par- 
ticularly in the body of our report. (See discussion on point 22, this report, p. 43 to 
p. 44, inclusive.) 

ABBREVIATIONS TO REFERENCES. 

This tr.=Transcript of testimony taken by this committee August, 1919, to December, 

1919, inclusive, under Senate resolution 210, in three volumes. 
Sen. tr.= Transcript of testimony taken by Senate Committee on Public Buildings 

and Grounds in December, 1918, under Senate resolution 371. 
H. tr.= Transcript of testimony taken by House Committee on Public Buildings and 

Grounds in January, 1919, bearing on Senate resolution 194. 
Rules Com. = Transcript of testimony taken by House Committee on Rules January 19, 

1919. . , , ^ 

Rept. Dec. 3, 1918=Report of United States Housing Corporation dated Decembers, 

1918. 



UNITED STATES HOUSING CORPORATION. 5 

\ 
Kept. May 19, 1919=Report of United States Housing Corporation dated May 19, 

1919, submitted in one volume only to the President by the Secretary of Labor 

under date of June 12. 1919. 
Rept. June 21, 1919=Volume II of the Final Report of the United States Housing 

Corporation, issued in advance of Volume I. 

EVIDENCE AND DISCUSSION. 

The Senators are entitled to have the evidence upon which the 
foregoing conclusions have been reached, and this evidence is here- 
after briefly summarized. It consists chiefly of the testimony heard 
by this committee, taking into consideration the attitude and in 
some cases the bias of witnesses; the official reports of the United 
States Housing Corporation dated December 3, 1918, May 19, 1919, 
and June 21, 1919; the testimony taken before the United States 
Senate Committee on Public Buildings and Grounds in December, 
1918, under resolution 371; the testimony taken before the House 
Committee on Public Buildings and Groimds in January, 1919, on 
Senate resolution 194; and upon certain permanent records of the 
United States Housing Corporation and certain signed published 
articles of former officials of the Housing Corporation. 



HOUSES PERMANENT. 

The chief evidence for the first conclusions consists of the houses 
themselves. There is no question but that the houses are permanent. 

Table 1, volume 2, page No. 393 of the Report of the United States 
Housing Corporation, June 21, 1919, gives the details of the houses 
erected. Of 6,148 families housed, 4,884 were in permanent houses, 
989 in permanent apartment buildings, 627 in ''ready-cut" houses, 
and 197 in dormitories. In addition, 350 single men were housed 
in a permanent brick hotel at Bremerton, Wash, 

The committee calls particular attention of the Senators to the 
''ready-cut" houses. These houses were fully sufficient for the pur- 
pose contemplated by the appropriation. The Housing Corporation 
contracted for 500 of these at $1,919 each and, according to a letter 
of the president of the Housing Corporation, some were erected at 
Norfolk, Va., and some at Pompton Lakes, N. J. According to 
Table 1, volume 2, referred to above, some were erected at TuUytown, 
but none at Norfolk and none at Pompton Lakes. Wliatever this 
inaccuracy may mean, the committee feels that more of them should 
have been used. They may have little salvage value, but their cost 
was one-third the cost of similar sized constructed residences, and the 
period of construction would have been infinitely shorter. Not only 
would the Government investment and resultant loss have been 
much less, but the large numbers of skilled mechanics employed in 
the finishing of the more permanent houses might have been quickly 
released for other war purposes. 

The Ordnance Department erected satisfactory housing for 
SI, 352. 92 per family at Penniman, Va., and for $1,980 per family 
at Nashville, Tenn. (Ordnance Department exhibit, pp. 604-608 
this tr.), and if some such good judgment had been shown by the 
Housing Corporation and some recognition given to the purpose of 



6 UNITED STATES HOUSING CORPORATIOIT. 

the act and the desbes of the legislative branch of the Government, 
the expenditure would have been infinitely less and the tangible 
result greater. 

With further reference to the permanence of plan, the committee 
hopes that the Senators and the public will take time to read care- 
fully the detailed instructions given by the Housing Corporation to 
its "town planners" and the "committee on design." (See pp. 
699-710 this tr.) It will be seen how far-reaching these visions were 
and how greatly they overshot the objective, which lay under their 
very noses — to wit, to win the war. 

II. 

LACK OF RESULTS. 

The committee worded this finding in the manner in which it appears 
because of the marked frequency that the word "speed" is found in 
the record. 

All of the witnesses, who were officials or former officials of the 
Housing Corporation, testified to their herculean efforts to provide 
housing rapidly, quickly, speedily, expeditiously, and in an emergency 
rush. Yet months were spent in "investigation," in obtaining 
"reports," in "selecting sites," and in deciding the proportion of 
group houses to double houses and to single houses. The "progress" 
of these preliminary affairs is not set out in testimony of witnesses, 
but is found in the project books which are part of the permanent 
record of the Housing Corporation. The project books contain 
chronological digests of all correspondence pertaining to each project, 
and even the most casual examination of these books shows that 
months elapsed between the institution of the investigation and the 
actual letting of the contracts. 

It must not be thought that all of the delay was in the preconstruc- 
tion period. The construction work itself was inordinately slow. 
Clauses emphasizing the element of time prominently appeared in all 
of the contracts; however, the committee has yet to be apprised of any 
contractor, working under one of the famous cost-plus-fixed-fee 
contracts, who finished his work on time. The G. A. Fuller Co., who 
erected the women's dormitories in Washington City, were to have 
completed same within three and one-half months from August 2, 
1918, which would have been approximately November 17, 1918. 
These buildings were not completed until June, 1919. This one 

Eroject is singled out for honorable mention because the committee 
as had opportunity, since its beginning, for personal observation. 
The officers of the Housing Corporation, when they discovered that 
this particular contractor was making a profit on the subletting of 
teaming and trucking, raised some objection but did not go so far as 
to force the cancellation of the contract because, as the president of 
the Housing Corporation explained, "he was so glad that the Fuller 
Co. had the contract, because of their efficiency" (see p. 551, this tr.). 
This same contractor had undoubtedly done excellent work in 
Washington for other governmental departments. It was either 
that the system in use by the Housing Corporation permitted a 
contractor to delay and be inefficient, if that was his natural bent, or 
forced an efficient contractor's organization to become an inefficient 
one. In either event, the story of all other contracts reads just as 



UNITED STATES HOUSING C0RP0RATI013". 7 

this one, though perhaps the delay was in no other case so marked, 
and thus we must assume that the contractors must be absolved of all 
blame for slowness, and the Housing Corporation must assume this 
blame, for in no case is there any record of a penalty being enforced 
for the failure to complete the contract in the specified time. 

This obstruction of the work of an efficient contractor is most 
flagrantly shown at the Bethlehem contract, where more than 
$2,300,000 was expended without the production of a single com- 

?leted residence. This contract was let to Whitney & Co. of New 
'ork City, on August 15, 1918, and a railroad switch and siding was 
to be provided by the Housing Corporation by September 1, 1918. 
This siding was in fact not furnished until October 31, 1918. Prior to 
that it had been agreed between the contractor and the Housing 
Corporation that the work on permanent housing could not be started 
until the siding was furnished. (Project book Bethlehem, agreement 
Sept. 18.) 

There were so many representatives of the Housing Corporation on 
the projects reporting to various different officials of the Housing 
Corporation and under conflicting orders of instruction, that it was 
necessary for the contractors from time to time to appeal to the 
Housing Corporation for instructions as to which of the representa- 
tives should be recognized. (See correspondence, contract, division 
cost engineers, reports.) 

The dates on which the first houses were occupied are found in 
Howe's Exhibit. (See p. 368, this tr.) 

HI. 

UNNECESSARY EXCELLENCE. 

On this point the evidence was strangely inconsistent. Bluntly 
confronted with the statement of counsel that the houses were all too 
"fancy," Mr. Burt L. Fenner, former general manager of the Housing 
Corporation, denied it and asserted that the houses were no better 
than the average industrial development, although he admitted that 
they might be better than ordinary houses built in the last decade 
(p. 297, this tr.). Counsel went after this same information on an 
entirely different tack, in questioning Mr. Howe, manager of the 
operating division of the Housing Corporation. It was suggested to 
him that the house rentals were too high. Mr. Howe promptly 
countered by saying, "There are no houses comparable with these." 
An examination of Mr. Howe's testimony in full shows it to be his 
firm belief that the houses of the Housing Corporation were better 
than any of the houses in any of the communities in which they were 
located which were at that time being devoted to the use of skilled 
mechanics and others of like housing requirements, (see p. 352, 
this tr.). 

In substantiating proof of the charge that the officials of the 
Housing Corporation were engaged in making a demonstration of 
model housing rather than solvmg an emergency war problem, we 
quote from the booklet issued by the Housing Corporation in a cam- 
paign now being carried on for the sale of Government houses in 
Bridgeport. 



b UNITED STATES HOUSHSfG* C0RP0EATI0:N'. 

MILL GREEN — ^TTS PLAN AND PURPOSE, AND ITS IMPORTANCE IN A NEW ERA OF HOME 

BUILDING. 

Mill Green as it appears to-day is first of all a solution by the United States Govern- 
ment of the problem of housing the tremendous influx of people who have come to 
Bridgeport during the past few years; and eecondh^ it is the realization of a desire to 
esta blish here ideal housing conditions v hich would be a matter of pride to the people 
of this city and in future years would be copied all over the world. 

To this end the Government called to its aid the leading experts of the country — 
architects, engineers, builders, and landscape gardeners — and these men have given 
most serious thought and study to the subject. The result of their united efforts is now 
manifest at Mill Green — a garden spot of ideal homes — substantial, sanitary, and at- 
tractive — in a setting of beautiful trees and shrubs, where in future years factory 
workers may live happily and in model surroimdings. 

The carrying out of such a tremendous project would be out of the question for 
any one except the Government. And Bridgeport is fortunate, indeed, in that the 
best effort of the best talent of the country, freely and patriotically devoted to the 
cause of the war, ha^-e here been crystallized into permanent homes — a model housing 
condition which people come from all over the country to see and admire. 

GRASMERE — A RARE EXAMPLE OF GOOD HOUSING AND DELIGHTFUL ENVIRONMENT 
NOW OFFERED TO HOME SEEKERS AT LESS THAN COST OF CONSTRUCTION. 

Grasmere represents the best efforts of the United States Government to create 
housing conditions of a superior type, where home seekers would find everything that 
moderate means can demand, where they would be assured of pleasant, sanitary homes 
with sufficient privacy to meet all of their desires, and in which they would ultimately 
find a house-purchase plan within the means of the average income. 

In all Government housing projects this has been the aim and purpose. Nowhere 
has the effort been crowned with greater success than in Grasmere. 

One has only to visit a project or to look over the beautifully 
engraved volume No. 2 of the United States Housing Corporation 
report of June 21, 1919, to realize the truth of this condition. Some 
of the houses are doll-like in size and frequently very impracticable 
in design, but that they are excellent in specifications, and that they 
are beautiful beyond words can not be denied. In viewing these 
houses, the question constantly recurred to the minds of the com- 
mittee, '^ Was there no one in the Housing Corporation who could for- 
get the 'perfect house' and remember that we were engaged in war ?" 

The committee finds that the garage building was a shock to both 
the president of the Housing Corporation, Mr. Eidlitz, and to Mr. 
Feimer, the general manager. Neither of them knew of it. (See 
pp. 295, 533, this tr.) 

Garages were planned at several projects (pp. 533-535, this tr.). 
The instructions to town planners referred to the manner in which 
garages should be accommodated, where provided. (See p. 702, this 
tr.) However, no garages were built until after the armistice, when 
57 were built at Vallejo, Calif. They were just as much out of place 
after the war as during it. As a matter of law, the emergency being 
over, there was no authority remaining vested in the Housing Corpo- 
ration, except the authority to complete existing contracts. They 
were a wholly imauthorized expenditure. The officials who were 
responsible for them attempted to justify them on the grounds that 
the rentals received have been profitable and that it was a ''good 
investment." (See p. 617, this tr.) This same justification might 
just as well apply to the erection of a scenic railway or the sinking of 
an oil well. 

For the other items mentioned the committee has as the authority 
the houses themselves, which have been visited, and the specifica- 



UNITED STATES HOUSING CORPORlTIOlSr. / 9 

*ions, which have been examined. In this connection the position of 
'^he committee might be broadly explahied. We do not pretend to be 
experts in industrial housino;. We do not know the "advanced 
thought" on that subject. We have seen and been in many homes 
occupied in comfort by mechanics and other advanced laboring men 
of our acquaintance, and we know that the houses erected by the 
United States Housing Corporation are better and finer than any of 
those that we have ever visited. They may not be as fine as some 
others that do exist and which we have not seen. 

But our own imderstanding of the purpose of the appropriation is 
that it was solely for winning the war. Congress certainly did not 
intend, whatever may have been the mtention of the Housing Corpo- 
ration, to enter into competition in architectural poetry with any 
other nation or private organization. We were neither comj^eting 
nor demonstrating. (See p. 298, this tr.) We were just plainly 
housing. Housing did not call for better houses, or even "just as 
good" houses, but merely called for houses that would be sufficient. 
True, they must last during the war, but this was also required of 
cantonments. No one in the Army complained of the lack of tile 
bathrooms, or in the Navy of the lack of individual sleepmg compart- 
ments, on the theory that the war might be long. 

The theory of the Housing Corporation seems to have been based 
on the psychology that the better the labormg man or mechanic was 
housed the better satisfied he would be to continue his efforts to win 
the war. We do not believe that this was necessar}^ for the loyal 
mechanics who were to be housed. The}^ would not have com- 
plained of the color of the houses, or of the curve of the dormer 
wmdows, or of the "orientation" of the blocks, just so long as the 
houses provided a reasonably comfortable shelter for themselves and 
their families, until the war was over. 

The last argument in favor of these items of gratuitous expendi- 
tures is that they added value to the houses "many times their own 
cost." If that is true, then something was strangely awry with 
the houses themselves. Davenport, Iowa, a fully completed project 
and described as being one of the very best, has just been sold for 
just about one-half of its cost. 

Is the committee to assume but for the gewgaws of architecture, 
town planning, and town planting, that these houses would have 
been worth but one-third of their cost, or some other percentage 
less than half? If that assumption is true, something is radically 
wrong. Something was radically wrong and the committee knows what 
it is. The "model idea" so permeated the whole organization of the 
United States Housing Corporation, from cost engineers and their 
new and perfect system of penny catching, to the pioneers of plumb- 
ing, which caused untold delay, that ever3'-thing in the way of plan- 
ning, constructing, and supervising was done on the scale of the 
Field of the Cloth of Gold. These things may have added value, but 
if so it was value that could not have been cashed in the open market. 
It was value beyond the accustomed purchase power of the persons 
for whom the houses were intended. The prices being received for 
the houses now are the prices ordinarily paid for houses by the very 
mechanics who occupy them. The price could not be enhanced 
unless they w^ere built for, intended for, and sold to people of much 
larger earning capacity. 



10 UNITED STATES HOUSING CORPOEATIOBT. 

IV. 

DELAY IN COMMITTEE ON DESIGNS. 

This proposition would be self-evident to any real business man. 
Committees can not work as efficiently as individuals. Where 
no one is designated as the authoritative head, and where three rnust 
agree, delay is the inevitable result. Even if harmony prevailed 
continuously, the very presence of the three designers, with their 
multifarious suggestions, must add to the accumulation of the delay. 

It is sufficient, perhaps, to refer specifically to the Crane Tract at 
Bridgeport, Conn., where seven town plans were drawn and con- 
sidered before the final one was adopted. The authority for this 
statement is the magazine contribution by Arthur Shurtleff, the 
town planner for that project, the article being "The development 
of a street plan," appearing in Landscape Architecture for January 
1919. For fear the Senators will not have time to read this article, 
we quote from page 67 of that issue: 

It is interesting to review the evolution of a plan from its first conception, through 
the doldrums and reversions which beset its middle course, to the perfection which 
it finally attains by progress through many revisions. A retrospect of this kind is 
especially interesting when many minds have taken part in a design which has gone 
forward to actual construction. 

The accompanying sketches outline some of the stages in the development of one 
of the Government housing projects now under construction at Bridgeport, Conn., 
which was studied by a group of three designers delegated by the United States 
Housing Corporation and working in conjunction with the officials of that corporation 
at Washington, to whom sketches and plans were submitted many times for comment 
and approval before the scheme was finally adopted and put under contract. In 
all. upward of a dozen authorities on architecture, town planning, engineering, man- 
agement, and operating contributed to the plan. In the judgment of the author of 
this article, who was town planner on the committee of three, the desirable results 
which were finally secured could not have been attained without this cooperation. 

At Bethlehem, Pa., the committee of designs was appointed 
April 12, 1918. The contract was not let until four montJis later, 
August 15, 1918, and the final specifications of the committee on 
designs were not completed until October 2, 1918. (Bethlehem 
Project Book, p. 6, history of project.) This, in itself, would be 
sufficient explanation of the Bethlehem fiasco, were not other short- 
comings of the Housing Corporation, previously referred to, amply 
in evidence. 

V. 

AVERAGE COST OF HOUSES. 

The committee has the- cost per house only on those projects where 
appraisals have been made, for only on those projects have the 
total expenses been segregated to a per house basis. 

These figures have been softened considerably by the Housing 
Corporation method of segregation of costs. The total expendi- 
ture of a project is not clearly divided by the number of houses 
erected, but certain deductions are made. For instance, at Alliance, 
Ohio, 181 houses were planned and only 89 built. In computing, 
the architects, engineers, and town planners fees, only 89/181, or 
one-half, is charged to the houses actually constructed, yet it is 
apparent that much the greater part of these services were neces- 



UNITED STATES HOUSING COEPORATION. 11 

sarily incurred in reference to houses actually erected. (See p. 592, 
thistr.) 

At Bath, Me., 90 houses were built, and 8 old ones altered, yet the 
total expense is divided by 98 — apparently with the thought that it 
cost as much to alter a house as to build a new one. 

On every project, the value of the surplus material as inventoried 
is deducted from the cost, when this surplus material is not bringing 
par on its inventory. (See p. 431, this tr.) 

Allowing, though, for all these efforts at softening the glassy stare 
of the looks of these costs, we find as follows: 

The highest cost per house is at Bridgeport, Conn., $7,263 each. 
Tlie lowest is $4,829, at Vallejo, Cahf. (with the exception of ready 
cut houses at Pomp ton Lakes, at $2,261), and the average cost of the 
houses appraised so far is $5,673.78 (see pp. 592-596, this tr.). 

VI. 

FAILURE TO USE OFFICE OF SUPERVISING ARCHITECT. 

The act of May 16, 1918, carried this clause: 

Section 1. (E) * * * Provided further, That whenever it is practicable to use 
any part of the office or field force of the Office of the Supervising Architect of the 
Treasury Department in or about any of the work contemplated by this act, the 
President shall do so. 

The Supervising Architect was asked to prepare plans and speci- 
fications for the temporary men's dormitories at the Washington 
Navy Yard, being project 27-C. These plans and specifications were 
completed in 23 days, and a representative of the Ofhce of the Super- 
vising Architect supervised the construction work. We must men- 
tion in passing that this work was completed for very nearly the 
estimated cost and that no additional fee or plant rental was paid the 
contractor. (See p. 324, this tr.; record of Burgess-Richardson 
contract.) 

Thereafter the Office of the Supervising Architect was not called 
upon by the Housing Corporation. 

It is interesting to note the discussion on this topic. Mr. Burt L. 
Fenner, a member of the firm of McKim, Mead A White, of New 
York City, was manager of the Architectural Division of the United 
States Housing Corporation and later the general manager. He 
originated the policy with respect to architects, devised the form of 
contract, fixed the compensation, and nominated the architects. 
(See pp. 269, 271-277, this tr.) 

His statement as to why he did not use the Office of the Supervising 
Architect was submitted to this committee by letter. (See p. 271, 
this tr.) In this letter he set out, among other points — 

1. That he wanted to use the organization and going force of the offices of the various 
architects. 

The committee finds that the Office of the Supervising Architect 
had the largest going force of draftsmen, technical employees, speci- 
fication writers, and construction supervisors in the United States. 
(See p. 323, this tr.) 

2. That the Housing Corporation desired, as far as possible, to use local architects 
who had an intimate knowledge of local housing conditions. This was afterwards 
explained by Mr. Fenner to mean chiefly a knowledge of the kind of houses the com- 



12 UNITED STATES HOUSING CORPOKATIOIT. 

munity was accustomed to having. It was also told the committee that there was a 
vast difference in this respect between such closely related communities as Washing- 
ton and Baltimore, Washington and Philadelphia, Washington and Aberdeen, Md., 
Boston and Portsmouth, N. H., New York City and Erie, Pa., etc. (See pp. 274-277, 
this tr.) 

The committee concludes, however, after an examination of the 
list of architects and their residences (see pp. 289, 599, 600, this tr.), 
that similar distances existed in most of the cases between the resi- 
dence of the architect and the location of the project. Peculiarly, 
we find that 15 out of the 51 architects were appointed from Mr, 
Fenner's home city. A New Orleans architect was- employed for 
Charleston, S. C, a New York architect for Erie, Pa.; a New York 
architect for Norfolk, Va., etc. 

The committee also finds that in the instructions to architects 
issued by the Housing Corporation, each architect was required to 
visit the project for the express purpose of obtaining local facts. 
We quote from page 20, volume 2, United States Housing Corpora- 
tion Report, June 21, 1919: 

Arrived at the town, each member of the "second investigation team" took up his 
own work. The architect found out what he could as to the kind of houses most 
practicable to build, and the kind that the workers would like. He talked to the 
workers and especially to their wives, and got some idea of how and where they wanted 
to live; he talked to the employers and got a statement of the wages paid, from which 
the rent to be expected could be reckoned; he talked to citizens generally, and kept 
his eyes open as he went about with the rest of the team. He also investigated local 
supplies of building material, labor conditions in building trades, and similar con- 
struction problems. 

It is evident from the above that the architect was not presup- 
posed to have an inherent knowledge of local conditions before 
receiving his appointment. The committee feels that the Supervising 
Architect's Office, designing as it does buildings all over the United 
States, had perhaps more knowledge of various climatic conditions 
and building ordinances than any other arcliitect's office in the world. 
This office would undoubtedly have been able to gather as much 
information in conversation with the wives of workmen as any of the 
architects employed. 

Met with the contention that the Office of the Supervising Archi- 
tect had no knowledge of house building for homes, the committee 
feels disposed to point out that all of the project architects were fur- 
nished with standard house designs and specifications by the Housing 
Corporation, and further that Mr, Fenner testified that industrial 
housing involved no difficulty of technique, but that the planning of 
these projects required chiefly a high degree of executive ability. (See 
p. 308, this tr.) The Office of the Supervising Architect, with its 250 
employees, designing, planning, and constructing each year millions 
of dollars worth of public buildings, equipping them, managing them, 
and maintaining them, must have concealed somewhere within its 
personnel a great amount of executive ability, which would have been 
available had the Housing Corporation but sought it. 

The committee does not say that the Office of the Supervising 
Architect could have performed all of the work, but it does insist 
that it could have designed a great proportion of it, and that it could 
have designed all of the work done in the city of Washington, for 
which the Housing Corporation paid $101,669.48. (Table pp. 599- 
600, this tr.) This office could have produced the work required on 



UNITED STATES HOUSING CORPORATION. 13 

many of the near-by projects, of which there were perhaps half a 
dozen within a radius of 100 miles; that it could have furnished 
competent field supervisors and work superintendents, and in all 
could have saved, in the judgment of the committee, more than 
$200,000. 

As to cost of work produced by the Supervising Architect, the 
critics, Mr. Waddy B. Wood, of Washington (who received nearly 
$50,000 per year out of the United States Government during the 
war period), and Mr. Fenner, pointed out that the annual r(^]iort of 
the Supervising Architect indicates that the production of plans 
and specifications cost that office 4 per cent of the work involved, 
whereas the architects employed by the Housing Corporation pro- 
duced their plans and specifications for less than 2 per cent. (See 
p. 318, this tr.) _ 

We call attention to Mr. Fenner's testimony that out of the usual 
commercial fee of 6 per cent paid to architects, on commercial work 
such as railroad stations, office buildings, libraries, etc., about 40 
per cent is profit and the rest, i. e., 60 per cent of 6 per cent, or 3.6 
per cent, is the cost of producing the plans and specifications. It is 
on such work, post offices, courthouses, subtreasury buildings, etc., 
though far more exacting in detail, that the Supervising Architect's 
cost has run to 4 per cent, and not on housing groups, where dozens 
and dozens of houses are built exactly alike in all respect, or in 
women's dormitories, where 12 buildings are carbon copies of each 
other; or in men's dormitories, such as the navy yard, where the 
cost of producing the plans and specifications by the Office of the 
Supervising Architect was just four-tenths of 1 per cent. 

The Office of the Supervising Architect would have produced 
plans and specifications at cost, containing no element of profit and 
no element of overhead. These two items constitute 53 per cent of 
the total sum of nearly $900,000 (p. 600, this tr.) paid out for archi- 
tectural expenses. 

In fact, the plans and specifications prepared by the Supervising 
Architect's Office up to the limit of his force, would have cost noth- 
ing. The employees in that office are compensated through annual 
salaries, which salaries are to be paid in any event. Their regular 
work would have been laid aside. (Wetmore's testimony, p. 326, 
this tr.) If the Housing Corporation had been billed by the Office of 
the Supervising Architect for the work done, it would have been a 
mere passing of money from one Government appropriation to the 
other without loss to taxpayers. It might be noted that no charge 
was made to the Housing Corporation for producing plans and 
specifications for the navy-yard dormitories. 

So slack was the work due to the cessation of new construction 
work that several employees, at the request of local architects who 
were engaged on Housing Corporation work, were given leaves of 
absence by the Supervising Architect. These men then worked for 
the local architects, where they were paid twice as much as they had 
been receiving. For every dollar of salary paid on Housing Corpora- 
tion work, the architects received an additional dollar for overhead, 
hence these draftsmen, Government employees on leave, were cost- 
ing the United States Government four times as much per hour as 
if they had been engaged on the same work in the Office of the 
Supervising Architect. 



14 TJE-ITED STATES HOUSING COEPORATIOIT. 

The facts are that the United States Housing Corporation did not 
want to use the Office of the Supervising Architect. By disregard- 
ing this portion of the act, just as the portion with respect to tem- 
porary buildings was disregarded, they were permitted to follow 
their likes and dislikes, and in favoring large architectural firms, 
which had probably in all their architectural lives never designed a 
residence to cost less than $50,000, they added to the Government's 
fuiancial burden all of the overhead, all of the profit, and a large part 
of the actual cost which was paid them, thus costing the Govern- 
ment at least $200,000 of unnecessary dollars. This action we can 
not help but characterize as indefensible and outrageous. 

VIII. 

COST-PLUS-PERCENTAGE ARCHITECT'S CONTRACTS. 

The act of May 16, 1918, includes the following clause: 

That no work to be done or contract to be made under or by authority of any pro- 
vision of this act shall be done or made on or under a percentage or cost-plus percentage 
basis, nor shall any contract be let until at least three responsible competing contractors 
shall have been notified and considered in connection with such contract and all 
contracts to be awarded to the lowest responsible bidder, the Government reserving 
the right to reject any and all bids. 

The contracts with architects contained a provision as follows: 

The owner shall pay to architects, in the manner described in Article IV hereof, 
and subject to the provisions of Article VIII hereof, as the full professional fee for all 

services under this agreement, the sum of dollars ($ -); and with the 

desire to render a public service in the national emergency, the architect agrees to 
accept said fee in full for his services hereunder. 

There were also the following provisions respecting reimburse- 
ments : 

The architect shall be reimbursed, in the manner described in Article IV hereof, 
and subject to the provisions of Article VIII hereof, for such of his actual net expendi- 
tures in the performance of the aforesaid services as are included in the following 
items: 

(a) The sums paid for drafting, including the verification of shop drawing, for 
specification writing, and for such portion of the supervision of the construction work 
as may be performed from his home office. 

(b) A sum equal to the sums paid to the architect under subdivision (a) of this 
article to cover the proper proportion of the general expenses of the architect's office, 
commonly called "overhead," representing items that can not be apportioned in 
detail to this work. But "overhead" shall not be computed on overtime. (See pp. 
712-716, this tr.) 

We assume that the architect's overhead is not enhanced whether 
his employees work fast or slow. We assume that the overhead is 
not increased if the hourly rate be changed. Yet, if the work is 
slowly executed or if the draftsmen are excessively compensated, 
the overhead is added to, dollar for dollar. This constitutes a worse 
evil than the cost-plus 10 per cent of construction work which caused 
so much comment and which was the basis of the enactment of clause 
7. In those iniquitous construction contracts, the contractor added 
a gain of only 10 per cent for every additional dollar he could add to 
the cost of the work. Under the architect's contracts, the architect's 
reward is 100 cents for every dollar he adds to the cost of the work. 

Our attention is called to a legal opinion prepared especially for 
this committee after an attack was made on this clause. (See p. 
589, this tr.) This opinion states the 100 per cent payment to cover 



UNITED STATES HOUSING CORPOKATION. 16 

"overhead" was merely a method of compiitmg overhead, and was 
not intended to increase the net profit of the architect. We grant 
that. The 10 per cent clause in the usual construction contract is to 
fix the contractor's profit and is not intended to increase the cost of 
the work. But the natural result of each of these two contracts is 
to increase the cost of construction, or in the case of architects, to 
increase the cost of production of architectural work. 

The committee does not believe that the overhead amounted to 
100 per cent. (See pp. 317, 716, this tr.) Sinceit was the clear intent 
that the architect should have no profit out of overhead, since over- 
head does contain a profit, we feel that some $50,000 has been paid 
out that was in violation of the spirit and letter of this provision. 
(For comparison, 25 per cent of $202,000, p. 600 this tr.) We make 
a recommendation at the close of tliis report. 

IX. 

RECOVERY OF ARCHITECT'S INCOME TAX. 

This was but an interesting sidelight to the work of the committee. 
It developed in examining the books of an architect, to determine 
the dates of the increases in rates of pay to his employees and to 
determine the extent of the profit in "overhead," that this architect 
had undeireported his income tax. 

It is only fair to the architect to say that the committee was not 
entitled legally to force a publication of this tax report, but it was 
volunteered by the architect. When the matter was called to the 
architect's attention, he had his books immediately audited, which 
confirmed the findings of the committee's auditors, and made a new 
mcome tax report. The Government will receive in this item $6,484.98, 
which sum will go far toward the payment of the expenses of this 
inv^^stigation. 

There is one other comment to make here at this time. This 
architect testified that he had allowed the Government officials with 
whom ho dealt, to fix his compensation. He was willing, he said, to 
work for nothing. (See p. 47, this tr.) Of course he did a great 
deal of work, but the compensation was so fixed by the Housing 
Corporation and other Government departments that his net income 
for 1918 was in excess of $50,000. 

In reference to this same subject, the committee finds that the 
fee fixing for architects in general was very generous for those who 
were willing to work on a patriotic basis. The usual profit to an 
architect is from 25 per cent to 40 per cent of his gross receipts. The 
architects employed by the Housing Corporation made at least 32 
per cent profit out of the sums paid them, for that was the amount 
of fees. Their fee was all profit, all other expenses being borne by 
the Housing Corporation. If there was an additional profit of 25 
per cent in "overhead," as the committee feels sure there was, it 
would add $50,519 to the profit and make the profit $324,750 out 
of a total pa^onent of $900,000, or a profit of 39 per cent. This is 
equal to the profit in the ordinary commission on commercial work. 

Hence, no matter what the patriotic intent of the individual archi- 
tect to serve for less than the usual meed of profits the intentions were 
nullified by the generosity of the Housing Corporation officials. 



16 UNITED STATES HOUSING COKPORATIOIT. 

X. 

NONCOMPETITIVE BIDS. 

This system of awarding contracts was discussed before the Senate 
Committee on Public Buildings and Grounds of the vSixty-fifth Con- 
gress, and the testimony on this point is found on pages 82 to 91 in- 
clusive of the Senate transcript, but it is so interesting that the 
committee decided it worth while to have it completely analyzed. 

Under the cost-plus-fixed-fee contracts, the contractor was never 
asked to "bid" on a contract. He was asked merely to "estimate" 
the cost and to "estimate" the length of time. He was also asked 
to state the amount of equipment which, in his "judgment" would be 
sufficient, and the size and personnel of the organization "proposed" 
to be employed, and the compensation to be paid. Finally the con- 
tractor was asked to name the price that he would accept for the 
rental of the plant equipment and the fixed fee for his services. 

A score was kept, grading the various answers to the above ques- 
tions, the total of the best answers being 400 points. The weight 
of the various answers with respect to the number of points allowed 
to each was as follows: Points. 

1. Lowest estimate of time 100 

2. Best organization 100 

3. Best plant equipment 80 

4. Lowest estimate of cost 60 

5. Ijowest fee for service 40 

6. Lowest fee for the rental of plant eqiiipment 20 

Total 400 

(See table 138, this tr.: see Webster's testimony p. 140-160, this tr.) 

1. With reference to the estimate of time, no contractor was ever 
held to his estimate. The time was put into his contract, but no 
penalty was provided for violation and none ever infficted. There 
was nothing to prevent an insincere contractor estimating an ex- 
ceedingly small period of time and obtaining 100 points credit, while 
an honest contractor, who put in a period of time which he knew 
would be required, might receive only 85 or 90 points, and thus be 
penalized 10 or 15 points in the scoring for his sincerity. 

The Housing Corporation admits the injustice of this system and 
explained to the Senate committee last December that the question 
of time was taken care of by providing that while additional work 
would command an additional fee, this additional fee would not be 
received if the completion of the contract was delayed. The com- 
mittee has found no instance where the contractor has been held 
responsible for delay. With reference to the contract for the women's 
dormitories in Washington, D. C, the contractor received an addi- 
tional fee and plant rental of $14,500, but the completion of the work 
had required nearly three thnes his original estimate of time. 

2. The personnel of the organization was never given by any con- 
tractor. The names were withheld, with the exception of the super- 
intendent, the reason given being "that the organization is our stock 
in trade and we make it a rule to withhold all names of our employees." 
(See par. 6, letter from Fuller & Co., p. 86, Sen. tr.) This point is 
is well taken, but a more obvious reason appears to the committee in 



UNITED STATES HOUSING CORPORATION. 17 

the fact that the contractor did not himself know who would con- 
stitute his organization. He knew he would need assistant super- 
intendents, time keepers, time checkers, surveyors, foremen, assistant 
foremen, etc., but wliere he was to get them and who he was to get 
was a question usually answered after the award of the contract. 

What was usually submitted was a list of the kind of employees to 
be used, with the daily wage to be paid to each. It was on this list, 
apparently, that the 100 points for organization would be awarded, 
and yet this list was never adhered to. The contractor might em- 
ploy twice as many foremen as he planned, or half as many. He 
might pay them more than he had planned or less. He might employ 
twice as many surveyors, or none at all, subject to the subsequent 
approval of the Housing Corporation. His "guess" as to what or- 
ganization he would need went into discard when confronted with 
actual conditions. This was perfectly natural. The "guess" of all 
contractors would fare the same way. The absurd thing is the 
awarding of 100 points, or one-fourth of the total, to such a "guess." 

Mr. Webster, manager of the construction division, attempted to 
indicate that another factor was considered in "organization," viz, 
the general organization of the contractor, his record for achieve- 
ment; in short, his reputation. (Webster's testimony, pp. 136-140, 
this tr.) This difference had naught to do with the theoretical list, 
but was based upon something which existed prior to the receipt of 
the competitive bids. In other words, the Housing Corporation, so 
far as "organization" might be concerned, having already a precon- 
ceived opinion of each contractor's, merit, might just as well have 
put down 100 points for the best reputation and 85 points for the 
second best before the bids were received. In that event, to be 
strictly honest, they should have informed the other bidders that 
they were subject to a handicap of 15 points for their lack of reputa- 
tion before they bid. From our understanding of competitive bids, 
there always exists some difl'erences in reputation for ability. This 
question should be settled and eliminated by the invitations. Those 
who are unfit are eliminated from bidding. Those remaining are 
deemed fully capable of performing the contract. (See p. 539, this 
tr.) From that point on the bidder sl\ould have stood on equal foot- 
ing, otherwise he stood to win or lose on the opinion of some Housing 
Corporation official. 

3. On the- list of plant equipment 80 points was awarded. The pro- 
posal said, ''Give a list of plant equipment you consider necessary." 
(See p. 83, Sen. tr.) The contract read, "The contractor agrees to 
furnish the following equipment." (See p. 88, Sen. tr.) However, 
the contractor did no such thing. He furnished just what was 
necessary. In fact, the Housing Corporation kept no record of what 
plant equipment was actually furnished. It was sensible that only 
such equipment should be furnished as was found to be necessary, 
but it was not sensible or consistent to award 80 points in the com- 
petition to a purely fictitious plant which might never be furnished. 

The Housing Corporation takes the position that the element of 
plant equipment was important because this equipment was scarce 
and they did not want to award a contract to a man who was insuffi- 
ciently equipped. This would be a reasonable position if the con- 
S. Kept. 336, 66-2 2 



18 UNITED STATES HOUSIN'G C0EP0RATI0:N". 

tractor had been asked to state what plant equipment he had, but 
he was not. He was asked only to state what he considered necessary, 
and in most cases a large part of the plant equipment was rented 
from other contractors or purchased after the contract was awarded. 
The Housing Corporation, m determining the 80 points, did not know 
whether the contractor had the plant equipment or even whether he 
could get it, or, having it, whether he would furnish it. 

4. We find a similar situation in the estimated of cost. The con- 
tractor was not bound to complete the work for the estimate cost. 
The Government paid the total cost, whatever it was. It saved the 
Government not a dollar to have a crafty contractor give an allur- 
ingly low estimate and thus gain 60 points. The Housing Corpora- 
tion admits the force of this argument, for Mr. Eidlitz testified (see 
p. 90, Sen. tr.) that a "bonus and penalty clause" was subsequently 
put into the contract so that if the contractor exceeded his estimate 
he would be penahzed on his fee, and that the ' ' bulk of the work was 
let with the bonus and penalty clause." This was not true. The 
bulk of the work was not let on the bonus and penalty clause. More 
than one-half of the work was let without the penalty clause. (See 
p. 163, this tr.) Furthermore, the committee has yet to learn of the 
penalty being ever inflicted. 

We have seen therefore that 340 points out of a total of 400 were 
awarded on considerations to which the successful bidder was not 
held bound in his contract, and of the balance, only 60 points or 
one-sixth of the total, was awarded on those points which increased 
or decreased the cost of the work to the Government, that being the 
fee for service and the fee for plant rental. The other factors which 
would aft'ect cost, viz, organization and estimate of time and plant 
equipment, were left uncontrolled. 

The Housing Corporation, at the time of letting a contract, did 
not know what plant equipment would be furnished, what organi- 
zation or personnel would be supplied, what the work would cost 
or how long it would take. It knew only what the plant rental and 
fee for services would be. For that reason, in the absence of con- 
trolling the other items, the plant rental and fijced fee should have 
been the determining factors, for by that only could the Housing 
Corporation be sure of saving dollars to the Government. 

Take the sample "score board" in evidence on page 138, Senate 
transcript, G. A. Fuller, the successful contractor, was awarded a 
total of 60 points more than his nearest competitor, because he was 
given the maximum on time, organization, estimate of cost, and 
plant equipment — the very four things to which he was not to be 
held in his contract. On the items to which he was held, the fee 
and plant rental, his total was $2,000 higher than the total of the 
Whitney Co. 

The Wells Construction Co. were ranked second, yet their combined 
fee and plant rental were $20,000 higher than the Whitney Co. As 
it turned out, Whitney's estimate of time and estimate of cost were 
more nearl}^ correct than either Fuller or Wells, as the work took 
nearly 10 months to complete, and the Fuller Construction Co. ran 
more than $300,000 over their estimate. From the standpoint of 
saving dollars to the Government, the system was unbalanced and 
top-heavy on the nonessential points. On this contract the Whitney 
Co. seems to have been entitled to the award. 



UNITED STATES HOUSING CORPORATION". 19 

The above considerations coupled with the fact that the bids were 
never pubhcly opened and that competing contractors did not have 
the satisfaction of seeing their competitors' figures at the time and 
of knowing that they had been honestly outbid, give reasonable 
grounds for the belief expressed to the committee by certain con- 
tractors that the successful bidders were "hand picked" in advance 
in several instances. 

XI. 

SECRET PROFIT OF CONTRACTOR. 

The profit mentioned under this item seems to have been born in 
carelessness and nourished in favoritism. 

The G. A. Fuller Co. was the general contractor on project 54- 
ABD, the women's dormitories in Washington, D. C. Under the 
form of contract used, the Government paid the actual cost, and in 
lieu of profit paid the contractor a fixed fee for his supervision. The 
Housing Corporation had asked the contractor to make a proposal 
as to the "maximum rental for which he would furnish teams and 
trucks. " (See p. 83 Senate tr. ; 86 Senate tr.) It was not the inten- 
tion of the Housing Corporation that the contractor should sublet 
these teams and trucks at a profit. (See p. 551, this tr.) The con- 
tractor secured a proposal from a local trucking concern at certain 
unit prices per day, based on a 10-hour day and including drivers. 
The contractor submitted a proposal to the Housing Corporation at 
unit prices somewhat lower but based, however, on an 8-hour day, 
not including drivers. (See pp. 86, 170, Senate tr.) 

The effect of this difference was surprising. 

The subcontractor, for instance, ofiered trucks at S30 per day, 
10 hours a day, including chauft'eurs. Chauffeurs were paid 35 cents 
per hour, malang the price $2.65 per hour for the truck. The con- 
tractor offered the same truck to the Housing Corporation at $28 
per day for 8 hours, excluding chauffeur, making the price $3.50 per 
hour for the truck alone, or 85 cents per hour profit to the contractor, 
which amounted on a 10-hour day to $8.50 per day per truck. There 
was a similar but smaller profit on teams. (See p. 471, this tr.) 

Now, between the date of the submission of the proposal (Aug. 
1) and the signing of tlie contract (Aug. 20) 20 days had elapsed. 
Wlien the contract was signed, the word "maximum" was not used 
in connection with the rental of trucks, but the contract read "the 
rental which the contractor agrees to charge" instead of "the maxi- 
mum rental which the contractor agrees to charge." It is clearly 
seen that the latter phrase would have given a different meaning; 
using the word "maximum" would have indicated that it was possible 
that a lesser charge might be made in a certain event, i. e., in the 
event that the trucks cost less. No explanation was given as to 
why the word "maximum" was not inserted in this contract, although 
the word "maximum" was inserted in a contract executed under 
similar circumstances with another contractor, the Dinwiddle Con- 
struction Co., in a contract signed August 17. 

The Housing Corporation officials testified (see pp. 230, 547, 
this tr.) that when this profit was "discovered" it was some tijne 



20 UNITED STATES HOUSING CORPOEATION. 

after the execution of the written contract. As a commentary 
on this discovery, it might be mentioned that the same kind of trucks 
were being rented to the Housing Corporation during the same period 
of time in Washington City by another contractor at $2.40 per hour, 
not including drivers. (See p. 549, this tr., original vouchers Burgess- 
Richardson.) 

However, as soon as it was "discovered," the Housing Corporation 
officials protested to the contractor. The contractor insisted that 
the contract gave him the right to make this profit and that he would 
not relinquish it. After some disputation, we will not attempt to 
say how much, the Housing Corporation received an opinion from 
its legal division that the contractor was entitled to this profit and 
that the Housing Corporation was powerless. 

We have no patience with such an opinion. It is found in the 
record (see p. 609, this tr.) for those who care to read it. We care 
only to call attention to several clauses of the contract, any one of 
which is sufficient to show that a profit of this kind was inconsistent 
with its spirit. 

"Teams and trucking" was covered under two clauses, which read 
as follows : 

1. The contractor shall furnish all teams of horses and wagons and all motortrucks 
that may be required on the work for the purpose of hauling and distributing mate- 
rials. The contractor shall be paid a rental on a per diem basis for the use of such 
horses and wagons and motor trucks in accordance with Schedule B hereto attached; 
it being understood that such rental shall include maintenance and upkeep charges. 
The number and character of such vehicles to be employed shall be subject to "the 
approval of the owner. The drivers of teams and motors shall be considered as labor, 
and shall be charged to the cost of the work. 

2. Payments by owner: The owner will maintain at the work a works superintend- 
ent, an auditor, and a disbursing agent, and will pay direct upon proper audit and 
certification; 

(a) To the vendors for all materials received. 

(b) All subcontractors under contracts made in accordance with the provisions of 
this agreement. 

(c) Monthly payments to the contractor for the use of plant, based upon the per- 
centage of work completed on the last day of the preceding month, as provided 
in Articles II, and as determined by the owner. 

(d) Monthly payments to the contractor for services as provided in Article V, based 
upon the percentage of work completed on the last day of the preceding month, and 
as determined by the owner. 

(e) Such general and specific expenses of the contractor not included in the above, 
but which are clearly chargeable to the cost of the work as provided in Article IV. 

(/) For teams of horses and wagons and motor trucks at rental not exceeding rates 
shown on Schedule B hereto attached. 

It will be seen from reading these two clauses above that payment 
for horses and wagons and trucks were included in the same article 
alid clause with payments to vendors for materials, and to subcon- 
tractors. Note also the words "not exceeding." We therefore 
mention these other clauses of the contract. 

3. Special requirements: The contractor hereby agrees at all times to use the best 
efforts in all acts hereunder to protect and subserve the interest of the owner. 

4. The contractor shall take advantage to the extent of the contractor's ability of 
all discounts available. The contractor shall transmit to the owner all bills for sup- 
plies and materials incurred by the contractor in ample time to enable the owner to 
take advantage of such discounts as may be available. 

All revenue from the operations of the commissary, hospital, or other facilities, and 
from rebates, refunds, sale of temporary buildings, etc., shall be accounted for by the 
contractor and applied in reduction of the cost of the work. 



UNITED STATES HOUSING CORPORATION. 21 

5. The ownor agrees to pay and the contractor agrees to accept in full payment for 
ser\dces as contractor in the execution of this work the sum of fifty-eight thousand 
dollars ($58,000). 

It is evident from the above clauses that the contractor was acting 
as the Housing Corporation's agent. He was in a position of trust. 
His whole profit was to be derived from the payment of the fee. 
Trafficking in subcontracts was contrary to that relationship. It is 
evident that the Housing Corporation officials — indeed, the same 
legal department, also — regarded the contractor as the agent of the 
Housing Corporation, for in an opinion given to serve an entirely 
different purpose, the following excerpts appear. (See Opinion, pp. 
253-258, inc., H. tr.) 

CONSTRUCTION OP CONTRACT, 

[Page 255.] 

1. It is clear that the Housing Corporation has, under the provision of this contract, 
complete control, not only over the results to be accomplished, but over the means 
to be employed in their accomplishment. This being true, the "contractor " in deal- 
ing with third persons, in purchasing material, and inhiringlaboris the agent of the 
owner and is not an independent contractor. 

In so far as the employer retains the right of general control and management of the 
work, he makes the employee his agent or servant, but in so far as he leaves the choice 
of means and methods to the employee, he makes him an independent contractor. 

2. One may be an agent and not an independent contractor, though he is paid 
according to the amount of work accomplished. 

3. The materials purchased and the labor hired by the Housing Corporation acting 
through the contractor as its agent. 

In so far as the contractor agrees to furnish a principal superintendent, the plant 
equipment, and to complete the work within the time limited, he is an independent 
contractor. 

We feel that this profit, which amounted to $16,028.20 (see p. 249, 
this tr., 473 this tr.) was a species of lagniappe given to this con- 
tractor, because we find that it was denied to others under similar 
circumstances, and because this contractor was not entitled to it. 
When the contract at Vallejo, Calif., was let, the proposal carried the 
same language, yet when the contract was signed on August 17 (three 
days before the Fuller contract was signed), the word ''maximum" 
was inserted, showing that the Housing Corporation knew at that 
time that the effect of leaving it out would be the laying of a founda- 
tion for a claim to profit by the contractor. 

The Fuller Co. has sent this committee a letter attempting to 
explain their position in the matter of this profit by saying that they 
did not know what they might have to pay for teams and trucks, 
and took a chance of losing money. How specious this statement is 
may be understood when it is known that the subcontractor who fur- 
nished these teams and trucks testified to the committee (see p, 343 
this tr.) that at the very time the bid was made by Fuller & Co., he 
was renting to Fuller & Co. hundreds of trucks on other construction 
projects in the city of Washington at the very same price he quoted 
them for the trucks on the Housing Corporation work. 

Our recommendation on this point is found at the conclusion of 
oui report. 



22 UiTITED STATES HOUSING CORPORATION. 

XII. 

CONSTRUCTION "EXTRAS." 

Perhaps this matter would not appear so serious to the committee 
were it not for the method followed. 

The financial recovery to the Government would be unchanged, 
whatever the intentions of the Housing Corporation officials, but the 
intentions and the ^ood faith of the officials would not be so sharply 
brought into question but for certain matters of method hereafter 
mentioned. 

The history is this : As construction work progressed many changes 
were found necessary. These changes involved both additions to 
and deductions from the original contract of the contractors and 
subcontractors as well. The usual process was to not haggle about 
the cost of the "extra" or the amount to be deducted, but to have 
the contractor give his own estimate and order him to proceed with 
the addition, or to make the omission with a certain figure in mind, 
subject, however, to revision after an exact ascertainment of the 
precise amount to be added or deducted. (See pp. 630, 654, 661, 
663, this tr.) 

Up to that point the committee is in accord with the process. 
The construction work was slow enough without delaying it to argue 
over the "extras." 

Some weeks or perhaps months after the work was done or omitted 
the estimating division of the Housing Corporation would compute 
these changes and ascertain whether the amount paid or allowed was 
correct. 

These estimators were men skilled in construction work and in 
construction cost. They would find a figure for the "extra" or for 
the omission, and refer it to their department chief for approval or 
disapproval of their calculations. 

We now find this situation: On the women's dormitories in Wash- 
ington, D. C, various change orders were submitted to the estimat- 
ing division for calculation. In each instance the figures of the indi- 
vidual estimator were approved by the chief of the estimating 
division, yet the committee finds in a large number of cases the 
figures and the comments of the estimator were erased from the 
sheet and larger figures, in many cases the figure demanded by the 
contractor, would be paid in Ueu of the figure found by the estimator. 
(See pp. 629 to 639, this tr.) We call two special items to the 
Senators' attention. 

The painting on these hotel buildings was let at a lump-sum 
fixed-price contract, "all according to plans and specifications, for 
$57,500." The contractor claimed an extra of $4,773 for finishing 
the floors in the dormitories. (See p. 648, this tr.) This request was 
refused by the estimating division for the estimator found that the 
item of finishing the floors was included in the contract under the 
plans and specifications, and this finding was approved by the chief 
of the estimating division. The committee has examined the speci- 
fications and agrees with the estimator. We find, however, that the 
comment of this estimator on this proposed extra has been erased 
and the subcontractor has been allowed the sum of $4,773. 



UNITED STATES HOUSING COKPORATION. 23 

The paintino: contract included the painting of the exterior stucco- 
work on all of these buildings. It was decided to omit this exterior 
painting. The contractor offered to deduct $3,000 if this omission 
were made. The estimating division computed that the cost of 
painting this stucco was $10,981, and that this sum should be 
deducted from the contract price. (See pp. 632, 633, this tr.) This 
finding of the estimating division — i. e., these figures — were erased 
and the contractor was ordered to deduct the sum of $4,000 from 
his contract. How absurd a deduction this is, is shown by the fact 
that the contractor was allowed in another change order $5,000 for 
painting the blinds alone on these buildings, and has insisted that 
$3,000 was an adequate sum to be deducted for the omission of the 
painting of the entire exterior of the buildings. 

Of course, we have been told by the Housing Corporation officials 
(see p. 659, this tr.) that on these extras the figures of the estimating 
division were disputed by the contractor; that the result was a com- 
promise between the two. This we can not accept* as a complete 
explanation. The erasures of the estimator's figures and the accept- 
ance in the majority of cases of the contractor's own figures indicate 
an ignoring of the computations of the estimating division. 

We think that is what occurred, but why it occurred we can not say, 
except that the subcontractors had more weight and influence with 
certain officials than their own Estimating Division, 

Nor can these "compromises" be explained on the grounds of 
exercising the best judgment in the rush of emergency. There was 
no emergency. Out of 27 change orders on this project, aggregating 
about $350,000, 24 of them occurred after the signing of the armistice. 
The Housing Corporation had time to devote, if they saw fit to do so, 
to the saving of the Government's money. The difference as between 
the amounts paid to the subcontractors and the sums which should 
have been paid them, and the amounts deducted from subcontractors 
and the amounts which should have been deducted, as compute^l by 
the estimator, Mr. Cooper, and approved by Mr. Dibrell, his chief, is 
over $30,000 on this project alone. The difference between the 
"extras" allowed to general contractors and the "extras" as com- 
puted by Mr. Cooper and approved by Mr. Dibrell, is over $20,000. 
On this latter item the Housing Corporation did not pay the full 
$20,000, but paid only the actual cost, but the general contractor got 
a percentage of his fixed fee of about 3.7 per cent on the entire $50,000 
excess. The Housing Corporation's net loss is $30,000 to subcon- 
tractors and about $1,750 to the general contractors. (See p. 697 
this tr.) 

We were told that some of these extras were allowed after the 
completion of the work, and based upon the "cost engineer's" reports 
of what the work had actually cost. Our wonder at this defense is 
natural, for we were told on another occasion that the "cost engi- 
neer's" reports were never accurate. (See p. 573 this tr.) This 
was when counsel was demonstrating that the projects pushed on to 
completion after the armistice were not nearly as far advanced at 
that time as Mr. Fenner testified to the House Committee on Public 
Buildings and Grounds. The correctness of cost engineer's 
reports seems to depend entirely upon "whose ox is being gored." 

We close this chapter on "extras" by making a further observation 
that the estimators' figures on other projects, such as were kept by 



24 trmTED states housing corporatiott. 

Mr. Cooper on this proje'^t, have not been preserved. They are non- 
existent. We could find them only in isolated rases. There is 
therefore no record as to whether the sums paid to subcontractors 
were or were not in excess of the computations made by the Esti- 
mating Division. In most cases the subcontra*^ tor's figures have 
been apparently O. K'd by one of the estimators; but if that is so, 
then there was a remprkable unanimity of opinion between the sub- 
contractor desiring to get as large an allowance as possible and the 
estimator charged with the duty of conserving Government funds, 
which unanimity of opinion we find, fortunately, did not exist on this 
project in Washington City, where the computations were made by 
Mr. Cooper. 

We wish the Senators also to note that this Mr. Cooper, after 
having refused to O. K. several estimates of "extras," which in his 
opinion were excessive, was offered a position at $15 a day by the 
general contractor on this project as "superintending foreman," a 
position which did not then exist. (See p. 651 this tr.) The gentle- 
man who was reported to have made this offer, Mr. Stenhouse, whose 
denial was received after the completion of the hearings, was em- 
ployed by the Housing Corporation upon recommendation by Mr. 
Baird, vi e president of Fuller & Co., and by Mr. Waddy Wood, 
architect for Fuller & Co. on all of their Government work in Wash- 
ington. (See application blank of Stenhouse in file Housing Cor- 
poration.) Shortly after refusing this ofTer Mr. Cooper was dismissed, 
being told that he had "pursued Fuller & Co. too hard." (See p. 
638 this tr.) 

Two choice results of this policy on extras well illustrate what 
occurred. 

The little infirmary building, opposite the Senate Office Building, a 
low one-story stru^ ture, cost, without equipment, more than $19,000. 
Over $10,000 of this was paid to subcontractors for heating, plumbing, 
paititing, etc. (See "Extras," Fuller contract.) This little building, 
low in stature but high in cost, deserves the attention not only of 
valuation experts but of the taxpaying public as well. 

Another item is the item of window blinds, to which some publicitj'' 
has already been given. The general contractor had -estimated the 
cost o± these blinds at $27,000, and the estimate was accepted and 
allowed as an extra, which meant that the general contractor received 
a fee on this sum, nearly 4 per cent, amounting to approximately 
$1,000. When the committee's auditors discovered that the blinds, 
themselves cost approximately $5,000, and the painting cost an 
even $5,000, $17,000 was either the cost of hanging 2,500 pairs of 
blinds, or the estimate was grossly excessive. 

The Housing Corporation has informed this committee that the 
hanging did not cost $17,000, but cost $1.63 per pair, or approximately 
$4,000. So the correct estimate of cost should not have been over 
$15,000. Had the estimating division computed this extra, or hav- 
ing computed it, had the construction division accepted the com- 
putation, the estimate would never have been accepted and the con- 
tractor would never have been paid $1,000 for supervising $15,000 
worth of work, but the Government would have paid a percentage 
on a reasonable cost instead of on an excessive estimate. 

We make a recommendation on these "extras" at the conclusion 
of this report. 



UNITED STATES HOUSING CORPORATION. 25 

XIII. 

LOAN TO THE SPRINGFIELD CONSOLIDATED WATER CO. 

The Housing Corporation, under "Clause D" of the Act of May 15, 
had authority to make loans to provide community facilities. 

Clause D: To aid in providing, equipping, managing, and maintaining houses, 
buildings, improvements, local transportation, and other general community utilities 
by loan or otherwise to such person or persons and upon such terms and conditions as 
he may determine: Provided, That no loan shall be made at a less rate of interest than 
5 per cent per annum, and such loan shall be properly secured by lien, mortgage, 
or otherwise: And -provided further , That no loan shall be made and no house or morTey 
given under this act to any person not an American citizen. 

The proviso that the loan should be properly secured was put there 
to expressly limit the lending power. Also it will be clearly seen from 
the reading of the act that such lending power existed only in con- 
nection with and as an aid to industrial housing. 

The Springfield Consolidated Water Co. supplied water to certain 
communities just outside the municipal limits of Philadelphia, and 
a small proportion within the limits. They had been ordered by the 
Public Service Commission of Pennsylvania to make certain improve- 
ments and extensions to their system to satisfy' complaints made by 
their customers as to the service given. This order was dated April 
18, 1918. (See Case 393, Public Ser. Com., Pa.). The fair value of 
this company's property as of October 1, 1917, as found b}^ this 
commission and shown in this order, was $7,203,320. 

The company had underlying bonds outstanding in the amount of 
$5,805,000, or more than 80 per cent of the value of the property, 
leaving an equity of onlv $1,398,320. Against this equity of 
$1,398,320, there was a general bond issue of ,$25,000,000 authorized, 
of which $3,543,000 was outstanding and $6,000,000 reserved to re- 
tire outstanding bond issues. Thei'e were also securing notes out- 
standing in the amount of $170,000. 

In this condition the company sought aid for the purpose of making 
these extensions and having exhausted the usual sources without 
success, applied for Government aid to the War Finance Corporation, 
which, after a careful investigation, refused the loan because of the 
inadec{uacy of the security offered and the inability of tlie cojpora- 
tion, in their opinion, to repay the loan. (Page 562, this tr.) The 
water company then came to the Housing Corporation. 

The chief engineer of the Housing Corporation, Mr. J. W. Alvord, 
had been an expert valuation witness for the water company in its 
controversy with the public service commission on two occasions. 
When the matter was taken under advisement by the Housing Cor- 
poi'ation, Mr. Alvord caused an investigation to be made by Prof. 
F. R. Tourneaure. This investigation was made and report sub- 
mitted to the president of the Housing Corporation, which report 
was signed by both Prof. Tourneaure and Mr. .llvord. It might be 
appropriate to state that Prof. Tourneaure's report was based, 
among other things, on a three-day physical examination of the 
property and books of the company and on the report previously 
made for the water company by Mr. Alvord. Both Prof. Tourneaure 
and Mr. Alvord recommended that the loan be made. (See p. 171- 
174, Sen. tr.) They made a finding that the general lien bonds, the 



26 UNITED STATES HOUSING CGEPORATION. 

outstanding bonds of the $25,000,000 issue, had a value of 40 cents 
on the dollar, "not taking into account bonds which may be 
held as security for floating debt." The committee does not know 
if any bonds were held as security in this manner. The investigating 
agent did not say so, but certainly indicated so, and if any were 
outstanding in this manner, the value of the bonds would have been 
proportionately decreased. 

In anjr event the Housing Corporation agreed to a loan of $500,000. 
As security for this loan they were to take bonds at the rate of 4 to 1 
of the loan, or if the entire sum had been used, would have received 
$2,000,000 of bonds as collateral. It will be borne in mind that this 
issue of $2,000,000 would have made the amount of bonds outstand- 
ing $5,543,000 as against an equity of $1,398,000, and these bonds 
would be at best therefore, worth but 23.5 cents on the dollar. 
However, the added value represented by the loan, made the equity 
$1,989,000, and the bonds, then, worth but 32 cents on the dollar. 

Considering the fact that these bonds were but a poor second mort- 
gage at most, subject to an overwhelming first mortgage, there was 
not enough of them delivered, poor as they were, to make adequate 
security. 

When this matter was questioned by the Senate Committee of the 
Sixty-fifth Congress, the Housing Corporation attempted to justify 
the loan not on the grounds of security offered, but on the grounds 
that the additional facilities were absolutely necessary for individual 
consumers, i. e., for the occupants of industrial housing. Prof. Tour- 
neaure's report does not bear out this statement. His specific quo- 
tation is (see p. 171, Sen. Tr.): 

The proposed extensions are necessary on account of war industries, and it would 
appear that this is a logical and proper place for aid by the Government War Finance 
Board. 

(P. 172, Sen. Tr.): 

While few of the employees of this plant reside in this district their use of water 
durtng working hours is very large. 

From the foregoing, we feel that the inadequacy of service was 
confined chiefly to the industrial plants. It was this precise situation 
that was seriously considered by the War Finance Corporation, which 
was organized expressly for that purpose. Having that in mind, it 
was evident that the War Finance Corporation felt that the need of 
water for the industrial plants or for the war program did not out- 
weigh the seeming inability of the Water Co. to repay, and hence 
they refused the loan. The Housing Corporation was not organized 
or authorized to invade the jurisdiction of the War Finance Corpora- 
tion. We can not understand nor appreciate the attitude of Prof. 
Tourneaure and Mr. Alvord in stating explicitly that the situation 
was one for the War Finance Corporation and at the same time 
recommending that the Housii>.g Corporation make the loan. 

In supplying the money to this company, the Housing Corporation 
was in no sense supplying community facilities for industrial housing. 
The houses, which were then contemplated by the Housing Corpora- 
tion and which were never erected in the Springfield district, did not 
justify an outlay of half a million dollars for water supply. The 
other houses erected in Philadelphia by the Housing Corporation 
were not served by this company. 



UNITED STATES HOUSING CORPORATION. 27 

Mr. Eidlitz, when questioned by this committee, said that his judg- 
ment would undoubtedly have been influenced had he known that 
Mr. Alvord had been an expert witness of the Water Co. He said 
also that he did not know that the War Finance Cor]:)oration had 
refused the loan. (See p. 560 this tr.) Mr. Eidlitz's memory doubt- 
less was at fault, for he knew of both facts. (See p. 560 this tr.) 

As an added item of ap]iarent looseness in this loan, we ]^'0int out 
the fact that the Housing Corporation advanced this money, after 
making the contract, upon vouchers for ex]~!enditures jiresented by 
the Water Co. Pi-of. Tourneaure's report stated that certain of the 
improvements contemplated had been started, but no provision made 
for payment. The committee finds that in spite of this language of 
the report and in spite of the evident intent of the loan to finance 
future improvements, the Housing Corporation reimbursed the Water 
Co. for over $54,000, of bills incurred and paid by the Water Co. prior 
to the making of the loan agreement: some of them more than a year 
old. 

We have a specific recommendation on this item at the conclusion 
of our report. 

XIV. 

FAILURE TO CANCEL BUILDING AT ARMISTICE. 

The Housing Corporation officials knew definitely November 6, 
1918, that the end of the war had come. (See p. 298 this tr., 156-7 
this tr.) 

On that day they held a conference of department heads to deter- 
mine what they should do with respect to their building program (see 
p. 569 this tr,'). According to Mr. Eidhtz, they decided to "ruth- 
lessly curtail" (see p. 568 this tr., 157 H. tr.). Neither the general 
shortage of houses nor the needs of the various communities were to 
be considered (seep. 151 H. tr.) The only question to be determined 
was whether the Government would save more by completion than 
by cancellation and abandonment. (See p. 568 this tr.) 

In the face of such well-expressed sentiments of efficiency, and 
loyalty to the Government funds, for which a word of commendation 
was received from the Chief Executive (see p. 610-611 this tr.), the 
committee finds that two projects at least were flagrantly pushed to 
completion, which should have been immediately canceled. One 
was the Crane tract at Bridgeport, Conn., and the other the Philadel- 
phia project. On one the Government spent $1,371,838.90, and on 
the other $3,406,000. Of course it is competent to explain how much 
of these expenditures had been incurred or how much liability had 
been assumed as of November 6. 

At the date of the conference, November 6, the Crane tract had 
been under construction just two weeks. The first progress report 
prepared by the cost engineer showed that only a " bare start had been 
made." (See p. 300, this tr.) The project was but four-tenths of 1 per 
cent conjpletea. The amount of tne commitments and contracts on 
that date was $270,793.56. We have no w ay of knowing how much of 
this material committed for had been shipped, but pictures taken 
on the site show that practically no material had been delivered on 
November 20. The salvage realized from material delivered has 
amounted to about 70 per cent. (See p. 431, this tr.) And we I'eel 



28 UNITED STATES HOUSING CORPOEATIOlSr. 

justified in stating that the salvage on this material iindelivered 
would have been larger because undelivered. We compute it, how- 
ever, at 70 per cent and find that the Government's loss on material 
ordered and on contracts would have been $81,238.06. We add to 
that the S163,241.04 which the report showed had been expended 
up to that date, make allowances for other expenditures incurred, 
and state v\dthout fear of contradiction that the Government's loss 
on cancellation would not have exceeded $244,479.10. 

As it now stands, the project which cost $1,371,838.90 is worth 
not to exceed $700,000. This figure is based on the average of the 
appraisals alreadj^ made in Bridgeport, 51 per cent, which is also 
the general average. (See p. 444-.593, this tr.) The Government's 
loss on this project is approxim.ately $670,000, as against the loss of 
$245,000 which would have been sustained if the directors of the 
Housing Corporation had fairly exercised their judgment in deter- 
mining whether to cancel or to continue. 

How clearly the Housing Corporation officials felt that their action 
in continuing this project was subject to criticism is shoVkTi by the 
fact that the very minutes of the conference of November 6 carry on 
their face an apprehension of congressional disapproval, but an appar- 
ent disregard of it. The minutes read ; 

To proceed as otherwise planned unless Congress decides other- 
wise on the Crane tract. (See p. 569, this tr.) 

On Philadelphia the percentage of completion on November 6 was 
6 per cent, considerably more than the percentage on the Crane tract, 
but the contemplated expenditure was vastly larger. The amount 
of commitments for which the Government was obligated at that 
time was $824,792.07, The amount actually expended was $163,125. 
(See p. 720, this tr.) We feel that the Government's loss on cancel- 
lation would not have exceeded $425,000. As it now stands, subject 
to appraisal, but based on the average of appraisals made, the prop- 
erty in Philadelphia is worth approximately $1,900,000, and the 
Governmenfs loss is therefore $1,500,000, as against $425,000, which 
it should have been. 

Neither Mr. Eidhtz, the president, nor Mr. Fenner, the general 
manager of the corporation, could recall at the time of their testi- 
mony before this committee what considerations induced them to 
continue these projects. (See pp. 301 and 571, this tr.) Mr. Eidlitz 
frankly admitted that the Crane tract could not be justified on the 
grounds of the necessity of housing or on the grounds of saving the 
Government's money, but that it was in the nature of an experiment 
which he was anxious to see completed. (See pp. 570, 571, 611, 
this tr.) 

Ordinarily directors of a corporation are held not accountable for 
honest errors of judgment, but the admission of Mr. Eidlitz and the 
notation with respect to the anticipated disapproval of Congress In 
the minutes of the conference convinces this committee that the 
Government did not get an honest exercise of discretion of its offi- 
cials, but got instead an abuse of discretion, for which directors of 
private corporations are held accountable at law upon suit of the 
stockholders. The stockholder in this case is the Government, and 
the Government has been undoubtedly damaged by the failure of its 
directors to exercise the judgment of which we hope, and they insist, 
they were capable of. 



UNITED STATES HOUSING COKPORATION. 29 

XV. 

THE women's DORAflTORIES IN WASHINGTON, D. C. 

So much has been said of this projec t, chiefly because of its acces- 
sibility to official observation, that the committee has made a special 
study of its construction and operation. 

We find that since its completion and since it has been fully occu- 
pied it has maintained itself as against its operating expenses. Its 
income, however, does not meet at all such items as depreciation or 
interest on the investment, and does not maintain the original 
equipment. 

Computing interest at 5 per cent, it would be necessary, to meet 
these items, to change the present rate of S45 per month now charged 
the occupants for room and board to S50.50 per month. (See p. 
372, this tr.) (Computing buildings at 25% of construction cost and 
equipment at 50%.) 

It is well to show what is being furnished for the sum of .f45. 

These 1,818 young women (the maximum capacity under present 
conditions) receive complete hotel service. Each has a single room, 
well furnished with specially made furniture, including a clothes 
chest or dress box and ample closet space. Each room has convenient 
access to shower baths and toilets. Maid service is furnished for 
cleaning the rooms, and all linens, such as sheets, pillow cases, and 
towels, are supplied. Laundry work may be done by the young 
women for themselves in specially constructed tubs in the basement, 
and electric current is supplied for electric irons and also for certain 
light cooking utensils. The occupants may also have laundry work 
done in the notel laundry at rates less than pr'ces current with, pri- 
vate companies. In addition, there is practically unlimited access 
to free telephones, and messages are received and delivered, mail 
distributed, and keys cared for. Infirmary service is given vvnthout 
extra charge in complaints where the patient is not too seriously ill. 
Reception halls are provided for the receiving of guests, and dancing 
may be enjoyed in the recreation halls. The meal service includes 
two meals a day, and the meals, as far as the committee can ascer- 
tain, are nourisliiaig and are cleanly cooked and well served. 

These young women are undoubtedly well cared for and the 
committee believes it is not beyond the financial ability of the occu- 
pants to ]my the actual cost of the things furnished them. As long 
as the actual cost is not paid, the Government is in the position of 
favoring those fortunate enough to obtain accommodations, to the 
extent of !$5.50 per month. 

The salary paid the manager, of which complamts have reached 
the ears of the committee, is a large salary, as salaries to womea are 
commonly viewed. The committee feels though that any woman 
who is capable of competently filling a position ordinarily occupied 
by a man, is entitled to the compensation ordinarily paid. The 
present manager. Miss James, receives S4,500 per year, with rooms 
and bath for herself and her mother. These accommodations, based 
on the present rates, add about $1,500 per year, so that her compensa- 
tion may fairly be stated to be $6,000 a year. A competent manager 
of an 1,800-room hotel is entitled to a salary of that size. The sala- 
ries to matrons of the various dormitories range from $75 to $100 



30 UNITED STATES HOUSING COKPORATIOIT. 

per month and the allowance of room and meals. These salaries 
are not, in the opinion of the committee, excessive. 

While it is comparatively simple to dispose of the theory of Gov- 
ernment hotels by saying that the Government should not embark 
upon a policy of furnishing its employees accommodations, it is not 
so easy to dispose of the fact that the Government has already in 
this instance embarked upon that policy. The question is no longer 
what should have been done but what ought to be done with this 
property now that the investment has been made. 

We can not leave the subject of the dormitories, however, without 
treating on another aspect of these hotels, i. e., the construction cost. 

They were, like other Housing Corpoiation edifices, too fine for 
war emergency. We grant that the emergency called for housing, 
otherwise no appropriation would have been made. We grant that 
there was an urgent necessity for housing homeless women in this 
city, and that the Government owed an important duty to the young 
women whose patriotism had brought them to offer their services 
in numbers beyond the housing capacity, yet v/e see no need of 
constructing buildings so fme as to cost, with furniture and equip- 
ment, $1,542.50 per room. And we see no necessity of furnishing 
them at a cost twice that of furnishing men's dormitories on other 
projects. (See p. 372 this tr.) 

We see no necessity of the expensive hollow tile construction. 
This objection was answered by the Housing Corporation officials 
saying the hollow tile was necessary because of the fire risk involved 
in a three-story frame dormitory. To this we agree, but we point 
out that the architect of this dormitory earnestly recommended a 
two-story buildmg, and we further mention that by far the larger part 
of temporary war buildmgs in this city were two-story frame build- 
ings. 

The architect had also recommended that the rooms be constructed 
for two occupants each, and stated that the saving to the Government 
would have been at least 30 per cent. This saving would have 
amounted to approximately $460,000, as the 12 dormitory buildings 
alone in construction cost amounted to $1,539,331.03. The evidence 
as to why young women were not permitted to be placed two in a 
room and why it was insisted that they be housed in single rooms 
was not put into the record because of the reluctance of witnesses to 
discuss a delicate subject at a public hearing. (See pp. 34, 54, 532 
this tr.) 

The committee understands, however, that this decision was 
reached upon the advice of a former police matron Avho sought to 
avoid the occurrence or extension of habits of vice. (See p. 533 this 

tr.) 

We can not too strongly voice our indignation at the acceptance 
by the Government officials of this theory, condemnatory as it is of 
the young women who were to occupy these hotels. We do not 
close our eyes to the existence of known evils ; we know of the existence 
of such things. We do, however, know that all over the United States 
young women of habit-forming ages are housed in colleges or dormi- 
tories by the "room-mate" method and we have never heard any 
reformer raise an outcry against the moral results. Whatever may 
have been the value of this expert's recommendation, that recom- 



UNITED STATES HOUSIITG CORPORATION. 31 

mendation was for permanent housing, not war emergency housing, 
and we give it no credence. (See p. 533 this tr.) 

Further, the women who came to Washington were for the most 
part mature in mind and purpose. And we have only the utmost 
impatience with the expenditure of an extra $460,000 of Government 
funds in the erection of temporary women's dormitories, out of fear 
that these young women might learn or impart to each other the 
knowledge of vicious secret habits. 

XVI. 

SHORTAGE IN NONEXPENDABLE PROPERTY. 

The committee on August 1, 1919, called upon the Housing 
Corporation to furnish it with an inventory of its nonexpendable 
property. It was the intention of this committee to check this 
inventory against the vouchers for such articles and against subse- 
quent sales to determine if the proper accountability had been made. 

We have never received this inventory. We do not know if it is 
within the power of the Housing Corporation to supply it. An in- 
ventory has been furnished us for the furniture and equipment of the 
women's dormitories (with the exception of the kitchen and cafeteria 
equipment) and a serious shortage exists. The comrPrittee's auditors 
have checked this inventory against the report of the equipment 
installed and the result shows approximately $11,968.68 of Govern- 
ment furniture and equipment is missing. This consists of such items 
as arm chairs, blankets, beds, and mattresses. (See p. 696, this tr.) 

There is no way of fixing personal responsibility for this shortage. 
No person was required to receipt for this furniture. The "equip- 
ment engineers" who made the purchases certified to its delivery to 
the respective dormitories. That it was delivered has not been de- 
nied or questioned by anyone, as far as we know, but that it is not 
there now appears over the signatures of the present dormitory 
matrons. 

Thousands and thousands of dollars worth of such articles as house- 
hold furniture, dining room and cafeteria equipment, automobiles, 
office equipment, tools, etc., were purchased by the Housing Corpora- 
tion, but where it is now will remain a mystery until this corporation 
furnishes a complete inventory and a complete report of the sales 
of such property. 

_ A statement has been received by the committee from Mr. Macomber, 
vice president, after the close of formal hearings which indicates 
that the foregoing shortage is only apparent and not real. We hope 
this is true. But the failure of the original inventory as formally 
requested by this committee and made apparently in a careful 
manner to give a true return in the first instance strengthens the 
committee's position in making the recommendation which it does at 
the close of this report. 

XVII. 

MATERIAL MISSTATEMENTS. 

The committee knows of no penalty, but wish some did exist, for 
the crime of deliberately misrepresenting facts in official reports for 
the sole purpose of creating a favorable impression in the public 



32 UNITED STATES HOUSING COEPOEATION. 

mind about the abilities and accomplishments of the author. The 
official reports of the Housing Corporation have many of such in- 
accuracies. 

We cite several in the report of December 3, 1918. The Real 
Estate Division cleverly camouflaged a report of its purchasing 
ability by stating that it had purchased for $4,730,615.68 real estate 
appraised at $5,600,529.74; this being a "saving" of ''15.5 per cent." 
(See p. 60, report Dec. 3, 1918.) The reading of this statement would 
naturally create the impression that this real estate was purchased 
for less than its appraised value. That was undoubtedly the im- 
pression that it was meant to create, otherwise the English language 
is meaningless. But this impression is far from the fact. Real 
estate was appraised by several committees of appraisers in each city. 
The valuations of the parcels varied of course in the opinion of these 
committees, and the values would often have a wide range from the 
highest to the lowest. We find though that Mr. Shannon, manager 
of the Real Estate Division, makes his showing of good purchasing 
ability by basing it entirely upon a comparison between the price 
paid and the sum total of the highest appraisal. 

The actual facts are that the sum total of the purchase price was 
$4,852,205.49. Taking the average of the appraisals, we find that 
the total of the average appraisal was $4,991,355.10, while the total 
of the highest appraisal was $5,740,742.74. The total of the lowest 
appraisals was $4,362,774.18. Thus, the property cost only $139,000 
less than the average and $500,000 more than the total of the lowest. 
(See p. 676, this tr.) In this connection Mr. Eidlitz testified (p. 210, 
House tr.) that it was the lowest appraisal upon which they tried to 
rely in the purchasing of real estate. If this were true, then the pur- 
chasing department failed badly, to realize its aim in this reliance. 
Mr. Shannon also testified (see p. 72, this tr.) that the appraisals of the 
real-estate boards were usually the best as well as the lowest, and it is 
evident from the figures above that a great deal more was paid than 
the sum total of the lowest and best appraisals. We do not say that 
too much was paid for the real estate. We simply point out that the 
work of the Real Estate Division was not so abnormally efficient as 
to entitle it to sing its own psean. 

This same head of the Real Estate Division referred in a public 
speech in glowing terms to the ability of his realtors, "Time alone 
stops me in the praise of these and, other realtors, whose unselfish 
efforts were of great benefit to our country." (See p. 85, this tr.) 

We believe the work of the realtors was efficient. We object only 
to having their unselfishness lauded to the glory of the Real Estate 
Division, when these men were paid $50 a day and their expenses for 
the service rendered. (See pp. 618, 694, this tr.) In the speech 
referred to above the manager of the Real Estate Division boasts 
again about excess purchasing ability in this language: 

It was these men who purchased millions of dollars of real estate located in 21 States 
and 50 separate communities for $800, 000 less than even community appraisals. 

The use of the latter words would indicate that realtors, buying 
for less than community appraisals, had accomplished something 
particularly difficult. But as noted before, it consists merely of 
purchasing property for less than the highest guess made by local 
committees as to its value. 



UNITED STATES HOUSING CORPORATION. 33 

The Architectural Division reported that the architects employed 
for it worked in a spirit of patriotic unselfishness and "their terms in 
every case yielded a margin of profit far below that which he com- 
monly makes, and is entitled to." (See p. 65, report, Dec. 3, 1918.) 

We do not question the patriotic intentions. We sharply question 
the "margin of profit." The usual commercial percentage is 6 per 
cent, which covers all items, drafting time, office expense, supervismg 
expense, and profit. The usual margin of profit accruing out of this 
6 per cent as a net earning to the architect is from 25 per cent to 40 
per cent. (See p. 319, this tr.) The undisputed margin of profit 
to the architects by the Housing Corporation was 32 per cent. (See 
p. 599, this tr.) Under the contract with architects the Housing 
Corporation paid all expenditures, made an allowance for overhead, 
and in addition paid a fee, which fee was undoubtedly net profit. 
The fees amounted to S274,231 out of a total of $885,960. The 
"item of overhead, "amounting to $202,077, undoubtedly contains 
within it a measure of profit to the architects. The overhead is 
usually about 75 per cent of the drafting expense (see pp. 317, 716- 
719, this tr.), but the Housing Corporation paid 100 per cent of the 
drafting expense. If 25 per cent of this overhead is added to the net 
fees it shows a total profit of 39 per cent out of the sums paid to the 
architects, which more than equals the "margin of profit he commonly 
makes." It was of course argued by the officials of the Housing 
Corporation that the usual architectural fee was 6 per cent, that the 
sums paid by the Housing Corporation aggregated considerably less 
than 6 per cent. This is not the point. The usual fee does not 
apply in unusual cases. These houses were duplicated over and 
over again. The true measure of the amount of work involved is the 
amount of money paid for drafting time for that is an indication of 
the amount of drafting and office work necessary. The amount of 
drafting time usually bears a certain fixed relation to the archi- 
tect's net profit. That fixed relation was maintained and the sums 
paid by the Housing Corporation and the architects did not work for 
less than the usual margin of profit. 

As an illustration of how futile a comparison of the customary 6 
per cent rate would be we point out the women's dormitories, in 
Washington City. 

There were 12 buildings exactly alike. They were "carbon copies" 
of each other. With the exception of the elevations and mtroduction 
of plumbing and heating supply lines, they were erected on a single 
set of plans and specifications. These 12 dormitories cost $1,774,651, 
or 70 per cent of the total cost of the project. (See p. 698-699, this 
tr.) Seventy per cent of the architectural fees and expense is over 
$32,561 for designing 12 duplicate dormitories. Based on the cost of 
1 dormitory, for only one set of plans and specifications was used, the 
percentage is not 6 per cent, the usual customary fee, but 22 per cent. 
The same illustration applies for instance at Bath, Me. Onlv 4 
types of buildings were used at this project to construct 90 houses. 
(Table No. 4, report June 21, 1918.) The total architect's fees and 
expenses was $16,421. (See p. 592, this tr.) Dividing this expense 
by 4, for the 4 types of houses used, we find architectural expenses 
for each type to be $4,105. The houses cost on an average $6,972 
S. Kept. 336, 66-2 3 



34 UNITED STATES HOUSING CORPOKATIOIT. 

making the architectural expenses 60 per cent, based on the types 
used. 

These figures are not quite fair, though Mr. Wood testified (see p. 
50, this tr.) that with respect to the dormitories this would be a fair 
allocation. But they are just as fair in their way as the comparison 
which the Architectural Division made with reference to the custo- 
mary fee of 6 per cent.- The work was not usual; the work was 
unusual, but the result of the statement of the architectural division 
was to convey a false impression and it is against this attempt that 
our condemnation is directed. 

The Engineering Division made the statement that the average of 
fees and overhead allowance to engineers "has been but 1 per cent of 
the cost of the utilities involved." (See p. 70, report Dec. 3, 1918.) 
In that event, but $130,600 should have been paid in engineering 
fees and overhead, as a total cost of all contemplated utilities work 
was $13,060,000. (See p. 68, report Dec. 3, 1918.) But we find that 
$639,385.32 was paid out in engineering fees overhead allowance, 
and expense. (See balance sheet Housing Corporation Aug. 31, 1919.) 
Of course this sum includes field salaries and expenses and we can not 
segregate the amount of fees and overhead, but taken all in all it is 
approximately 5 per cent of the contem'plated work, and the contem- 
plated work was not one-half of the actual work executed. The 
usual commercial percentage for engineering services is but 5 per cent 
of the actual cost of executed work. 

Mr. Eidlitz was perhaps more inaccurate in his statements before 
the various committees than any other witness. 

In discussing the form of contracts used, Mr. Eidlitz testified before 
the Senate Committee on Public Buildings and Grounds. (See p. 90, 
Sen. tr.): 

After the first month of this method of doing it, we put in a bonus and penalty clause. 
* * * The bulk of the work was let with the bonus and penalty clause. 

This was not true. In the first place, the form of contract was not 
"changed after the first month," but contracts without a penalty 
clause were let for more than two months after the first contract was 
let. In fact, of two contracts, both let on October 3, 1918, one for 
$703,000 and one for $964,000, one carried the penalty clause and 
one did not, to the evident favoring of the contractor who faced no 
penalty. (See exhibit, p. 165, this tr.) In the second place the 
"bulk of the work" was not let with the bonus and penalty clause, 
hntwitlioutit. Outof $51,768,140.36, the total amount of thecontracts 
awarded, (according to L. K. Sherman, p. 163, this tr.) only one- 
third of them were let with the penalty clause. 

Mr. Eidlitz testified to the same committee that the Housing Cor- 
poration, in letting contracts, could not reject "any and all bids." 
(See p. 92, Sen. tr.) That was not true. The act of May 16, 1918, 
section 7, carries this language: 

* * * All contracts to be awarded to the lowest responsible bidder, the Govern- 
ment reserving the right to reject any and all bids. 

And the written invitation sent out to contractors requesting their 
bids carried this language. (See p. 1, Proposals for Contracts): 

We reserving the right to reject any and all bids. 



UNITED STATES HOUSING CORPORATION. 35 

The opinion rendered Mr. Eidlitz by his own legal division, (see p. 
588, this tr.; p. 205, Sen. tr.) advises him of the wide latitude which is 
permitted by the courts in exercising this power. 

On the question of fixed fees for contractors, Mr. Eidlitz testified 
that he fixed the fees. That the average fees on work under $1,000,- 
000 was 3^ per cent, and over $1,000,000, was 2^ per cent. (See 
p. 35, Sen. tr.) That was not true. The prepared schedule of fees 
fixed was introduced in evidence (p. 146, this tr.), and shows that 
there was no fee as low as 2^ per cent, except jobs over $5,000,000, of 
which none were let. (See pp. 164-166, this tr.) 

Mr. Eidlitz attempted to explain before this committee that he 
meant the average oi fees actually paid. We take time to reply that 
whatever was paid was due to the opinion of the contractor. What 
was fixed was fixed by Mr. Eidlitz. He "fixed the fees." Further- 
more, Mr. Eidlitz did not follow the schedule, which was introduced 
in evidence. The scheduleitself is a delusion. He testified (see p. 543, 
this tr.), that the official estimate at Erie was $3,700,000 and that 
he had fixed the fee according to schedule. This is not true. The 
ofiicial Housing Corporation estimate on the West Tract at Erie was 
$1,644,000. The fee fixed by Mr. Eidlitz was $70,000 or 4.13 
per cent. The estimate on the East Tract was $604,000, and the fee 
fixed by Mr. Eidlitz was $30,000, or 4.95 per cent. The total fee on 
the two contracts (which were awarded as one contract) was $100,000, 
or 4.45 per cent of the total estimate of $2,248,000. Tliis was the 
figure used by counsel in examining Mr. Eidlitz (see p. 543, this tr.), 
and was denied by Mr. Eidlitz. Counsel's memoranda were not be- 
fore him at the time, but the figures above quoted are taken from the 
official estimates furnished this committee by the Housing Corpora- 
tion, marked "Estimates, Request No. 3, Erie, Pa." 

This same delusion about the contractor's fixed fee was repeated 
by Mr. Manson, one of the Legal Division of the Housing Corporation, 
in an opinion rendered, which is found on page 254, House transcript: 

Instead of being compelled to pay the usual 7 to 10 per cent charge of contractors 
in peace times, the corporation was able to get its work done for fixed fees, which in 
relation to cost range from 2§ per cent to 3^ per cent. 

Mr. Eidlitz took occasion to defend the G. A. Fuller Co., appar- 
ently accused by the Senate committee in the investigation of De- 
cember, 1918, of making profits to which it was not entitled. A 
position and an accusation adopted in toto by this committee. In 
this defense Mr. Eidlitz caused an audit to be made at the Govern- 
ment's expense and presented it to the House Committee on Public 
Buildings and Grounds, while that committee was considering Senate 
resolution 194 of the Sixty-fifth Congress. (See pp. 243-246, H. tr.) 

This audit is an artful exhibit, but it is a sham of what it pre- 
tends to be. We hope the Senators will take the time to read the 
testimony on this audit by the auditor who made it, found on pages 
116 to 128, this transcript. 

Mr. Eidlitz testified that he did not see this audit, but he must 
be held responsible for it, for he ordered it, paid for it with Govern- 
ment money, and presented it to the House committee. The audit 
created a false impression before the House committee, and it was in- 
tended to create the very impression that it did. It certainly was 
not a proper item of Government expense, and the individual respon- 



36 UNITED STATES HOUSING CORPORATIOIS'. 

sible for ordering it should be called upon to pay back this sum to 
the Housing Corporation treasury. 

Mr. Fenner presented an array of statistics to the House Com- 
mittee on Public Buildings and Grounds with reference to the stage 
of completion of the various projects. This was directly pertinent 
to the hearings on Senate resolution 194, which provided for the ces- 
sation of work on all projects less than 75 per cent completed. The 
percentage of completion was important. Mr. Fenner gave his testi- 
mony on this point. (See pp. 142-167, H. tr.) This testimony was 
very incorrect, and in all cases the inaccuracy increased and never 
decreased the percentage of completion. For instance, Mr. Fenner 
testified that Aberdeen, Md., on January 14, 1919, was 74.2 per cent 
completed. The cost engineer's report shows 58 per cent. He testi- 
fied that New Brunswick, N, J., was 63 per cent completed, and the 
cost engineer's report shows 41.7 per cent. He testified that New 
London, Coim., was 63 per cent completed, and the cost engineer's 
report shows 35.02 per cent. He testified that Niagara Falls was 
30 per cent completed, and the cost engineer's report shows 21.64 
per cent. There were others of similar ilk. (See pp. 301-304, this 
tr.) Mr. Fenner did not prepare these figures, but must be held ac- 
countable for them. He told this committee that his testimony was 
based upon data which had been prepared for him. This data is not 
now in existence. (See p. 305, this tr.) 

The data upon which the committee lays the charge of inaccuracy 
is the cost engineers' reports. We were told that the cost engineers' 
reports were not reliable. (See pp. 303, 573, this tr.) We are told 
that Mr. Fenner based his estimate upon the opinion of the works 
superintendents. We reply that the percentages quoted from the 
cost engineers' reports are ''based upon superintendents' estimates," 
and further that the cost engineers' reports carry the signature of the 
works superintendents. We call particular attention of the members 
of the House Committee on Pubhc Buildings and Grounds to the 
discrepancies in Mr. Fenner's testimony. 

In fact the members of the House committee are also entitled to 
know that the word "commitment," used by Mr. Fenner in his long 
and exphcit testimony, has no real meaning, and there is no real basis 
for the computations made. Mr. Fenner himself (see p. 305, this tr.) 
was unable to tell how the commitments had been computed. Mr. 
Sunderland, the individual in the Housing Corporation assigned to 
assist this committee, was unable to explain how commitments were 
arrived at. (See p. 305, this tr.) The impression evidently created 
by Mr. Fenner on the testimony regarding commitments would be as 
follows : 

Mr. Fenner would state, for instance, with reference to Bath, Me. 
(see p. 151, H. tr.): 

The percentage of executed work is 68 per cent; the percentage of completion, in- 
cluding materials purchased and other commitments, is 83 per cent. 

The committee does not know whether commitments included con- 
tracts let, miaterials ordered, materials delivered, materials paid for, 
or all four or any two or more of these items combined. 

Mr. Fenner did not seem to know. 



UNITED STATES HOUSING CORPORATION. 37 

For instance, on page 153, House transcript, with reference to 
Erie, Pa., Mr. Fenner testified: 

The percentage of completion executed is 35 per cent; the percentage of completion, 
including materials purchased and other commitments, is 65 per cent. 

The House committee was evidently given the impression that this 
project was 65 per cent completed, but 30 per cent of this completion 
IS unexplained and meaningless. 

Mr. Alvord, the gentleman responsible for the loan to the Spring- 
field Consohdated Water Co., discussed under point 15, testified con- 
cerning this loan, to the Senate committee in December, 1918 (see 
pp. 156, 157, Sen. tr.), in response to a question by Senator Lenroot, 
that the bonds to be received by the Housing Corporation as security 
for this loan were a part of the bonds already described as outstand- 
ing, and that additional bonds would not be issued. This was untrue. 
With the knowledge Mr. Alvord had of this proposition, or should 
have had, he should have known that it was untrue. 

Mr. Sherman, the present president of the Housing Corporation, 
and Mr. Lewis, who was manager of the Construction Division in 
June, 1919, jointly succeeded in conveying a serious piece of misin- 
formation to the House Committee on Rules, at its hearing on June 
19, 1919, on House resolution 49, appearing on pages 13 ana 14 of the 
report of those hearings. 

The committee was evidently criticising for continuing the Crane 
tract at Bridgeport, Conn., after the armistice, and Mi-. Sherman was 
asked if all of the Bridgeport developments had been undertaken 
since the armistice. The following questions and answers appear : 

The Chairman. All undertaken since the armistice was signed? 

Mr. Sherman. No, sir; only this one little development known as the Crane tract; 
that is the only one in all our housing operations. 

Mr. Pou. How much has been expended on that particular one, which was under- 
taken since the signing of the armistice? 

Mr. Sherman. I will ask the chief of construction to answer that question. 

Mr. Lewis. Perhaps $300,000. 

Mr. Rodenberg. That is the amount that has been expended, but how much have 
you obligated the Government for on that additional enterprise? Is the total amount 
$300,000? 

Mr. Lewis. The obligations for the Crane tract, as I remember it, were about 
$300,000. 

There was no project at Bridgeport less than $588,000. The 
Crane tract was next to the largest of the Bridgeport projects and cost 
$1,373,000. At the time Mr. Sherman and Mr. Lewis were testifying, 
this work was nearing completion. There was no excuse for any 
well-informed officials to make such a gross misstatement. The 
evident meaning of these words permit of no quibbling. The evident 
impression which they desired to convey to the House committee was 
that the Crane tract was a "little development"; that it involved 
an expenditure of only $300,000, and this impression was false. 

A very meaningless statement, but which was evidently intended 
to convey an impression, appears in a table, part 2, page 114, of the 
report of December 3, 1918. A table appears there showing the 
houses requisitioned from the owners and leased by the Housing 
Corporation to other people, who in turn agreed to house war workers. 
There is a column headed "Cost of rent per person per month," in 
which there appears such items as $3.95, $3.25, $3.64, and $4.63. 
The impiession a reader would get fiom this column would be that 



38 UNITED STATES HOUSING C0RP0RATI03T. 

that was the cost paid by the war workers for rent, and yet it is merely 
the monthly rent divided by the number of possible occupants of the 
house. The Housing Corporation did not rent directly to war workers. 
The war workers rented from the lessees of the Housing Corporation, 
and the war workers paid any where from $12.50 to $20 per person 
per month. (See pp. 1-20, this tr.) 

Either Mr. Sherman or Mr. Eidlitz is guilty of a serious misrepre- 
sentation. 

Mr. Eidlitz submitted to the Senate Committee on Public Buildings 
and Grounds (see pp. 20-22, hearing of December, 1918), a statement 
of the amounts of all contracts let. These contracts totaled 
$63,491,146.65. This committee requested Mr. Sherman to give a 
statement of all contracts let ; this statement being deshed for another 
pm'pose, viz, to get an idea of the different kinds of contracts used. 
Mr. Sherman submitted a statement (see pp. 162-163, this tr.), pur- 
porting to be a statement of all of the contracts let, which totals 
$51,708,140.36. One of these statements might be as far incorrect 
as $12,000,000. We do not know if Mr. Sherman excluded contracts 
from this statement. We do not know if Mr, Eidlitz stated that con- 
tracts had been let when they had not. The discrepancy was noted 
only after the close of the hearings. The truth doubtless lies some- 
where between the two statements, as it is practically impossible to 
reconcile different figures submitted by the Housing Corporation. 

Ml'. Manson, former member of the Le^al Division of the Housing 
Corporation, and personal counsel appearmg on behalf of Mr. Eidlitz, 
before this committee, attempted to give the committee a misstate- 
ment of fact on which he was either not informed at all, or if informed, 
knew the truth was otherwise, when he made the same assertion about 
the bonds of the Springfield Consolidated Water Co. as had Mr. 
Alvord. (See p. 536, this tr.) 

The Construction Division, in the report of May 19, 1919, page 144, 
threw a wholly gratuitous criticism at the contractors to explain why 
the costs always exceeded the estimates: 

It will be noted that in every instance the actual cost exceeded the contractor's 
estimate of cost. But the major portion of excess costs are probably chargeable to 
the extraordinary labor and material conditions caused by the war and not fullv 
comprehended by the contractors at the time they made their estimates. 

If they had been entirely honest with the public and with the 
officials to whom the report was addressed they would have stated also 
that the Housing Corporation had made their own estimates; that 
their estimates were usually lower than the estimates of the contrac- 
tors and hence wider of the mark. 

XVIII. 

AN UNHELPFUL ATTITUDE. 

At the outset of the investigation, the committee, its counsel, and 
assistants, were shown every courtesy, and a sentiment of willing- 
ness to help was everywhere apparent. 

It may be that the Housing Corporation officials anticipated a 
purely proforma investigation. It may be that they resented the 
lailure of the committee to accept at their face value all statements 
made. Whatever the cause, as the investigation proceeded, it soon 



UNITED STATES HOUSING COEPORATION. 39 

became obvious that the Housing Corporation officials were not 
entirely frank. 

The culmination of this attitude occurred when the individual 
who had been specially designated to answer the communications of 
the committee unbosomed himself and expressed his own ojjinion 
and perhar.s the opinion of other officials, his free discussion disclos- 
ing the effort being made to prevent the committee's investigators 
opening up "new leads." (See p. 267, this tr.) 

Finally the position was taken by the president of the Housing 
Corporation that the counsel and his assistants could not interview 
department heads or subofficials of the Housing Corporation without 
his consent. They had been instructed not to talk without the 
consent of the president. (See p. 258, this tr.) This consent, we 
apprehend, would have been contingent upon the president ascer- 
taining not only what information was wanted but why it was wanted. 

We have put this evidence into the record first as an indication of 
the obstacles under which the committee conducted its investigation, 
and second for whatever evidentiary value it may have as to the 
correctness of our other conclusions as to motives and methods. We 
hope the Senators will read the testimony on this point. (See pp. 
257-269, this tr.) 

XIX. 

CONDITION OF FISCAL RECORDS. 

The committee had read the "history and organization of the 
fiscal division," described in the Housing Corporation report of 
December 3, 1918 (see p. 103), and quite naturally received the 
impression that accurate statements of the fiscal division of the 
corporation could be had as promptly as is customary under cor- 
porate management. On August 20, 1919, the latest avaliable 
balance sheet of the corporation was that of June 30, 1919. The 
balance sheet of July 31 was not furnished until September 8, 1919. 
On October 7 we were furnished with the balance sheet of August 31, 
which is the latest balance sheet with which the committee has been 
favored. 

The attention of the committee's auditors was directed to a series 
of accounts as shown on those balance sheets, among them being 
tabulations: 

Advances to be accounted for, Exhibit C $353, 949. 26 

Advances recoverable, Exhibit D 22, 683. 90 

Construction project, Exhibit F 48, 859, 076. 15 

Departmental overhead , Exhibit G 1, 388, 257. 71 

The above accounts appeared as assets or debits on the statement 
of July 31. Knowing that the Housing Corporation had sold a 
considerable amount of construction materials, the committee was 
interested in ascertaining why there were no "Accounts receivable." 

Accounts receivable, so it was discovered, appeared on the state- 
ment of July 31, as a Hability in the amount of $398,862.84. The 
appearance of a debit account on the credit side of the balance sheet 
was the occasion of a detailed examination and the finding of the 
auditors was as follows : 

The actual accounts receivable amounted to an asset of $257,437.75, 
but by reason of incorrect application of cash payments on account 



40 TJISriTED STATES HOUSING COKPORATION. 

of purchases of materials without any corresponding charges for 
materials delivered, this asset was entirely absorbed and in lieu 
thereof the balance sheet showed a corporation liability of $398,862.84. 

This most unusual preparation of the corporation balance sheet 
was occasioned by the lack of understanding apparently on the 
parts of the heads of a number of the departments of the methods 
employed in bookkeeping practice, and a seeming lack of control on 
the part of those directly responsible for the carrying out of a sj^stem 
of accounting. 

In January, 1919, a large number of remittances for sales of equip- 
ment, supplies, and materials began to reach the treasurer of the 
Housing Corporation. It seems that this department was at a loss 
to know how to enter these receipts on the books. The dilemma 
was temporarily solved by piling the checks in a desk drawer. After 
holding these fast-accumulating remittances for nearly a month, 
they were finally entered in a specially prepared one-column cash 
book. The entries consisted only of the name of the maker of the 
check, the number of the check, and the amount. These entries 
merely indicated that "John Smith's" check for $5,000 had been 
received, but it would give no information as to whether it was in 
payment of an outstanding account of "John Smith," whether it 
was in payment of an account of "William Green," or whether it was 
a payment in advance as earnest money on account of John Smith, 
or some other person. 

The result of this sudden entry of all of these checks was the over- 
whelming of the bookkeeping department with the opening of new 
accounts, the new account being opened in the name of the maker 
of each of the checks, in which account the maker was credited with 
the amount of the check. On September 15, 1919, credits amount- 
ing to $656,300.59 were still being carried on the books of the cor- 
poration with no debits or charges to offset them having been made. 
To give a specific instance: 

The account of the Housing Corporation with Albert Pick & Co., 
of Chicago, 111., gave a credit balance to Albert Pick & Co., of $130,- 
049.62, yet this concern had purchased supplies from the Housing 
Corporation aggregating this amount, practically all of which had 
been delivered. After some inquiry the investigators for the com- 
mittee located an employee of the Housing Corporation who had 
bills of sales in his desk for deliveries to Albert Pick & Co. in sums 
practically balancing the account. The dates on these bills indicated 
that they were an accumulation of more than nine months. The 
head of the bookkeeping department was surprised to learn of the 
existence of these bills. He had previously told the investigators 
that the Sales Department was at fault. This condition was pointed 
out to the comptroller and he likewise had been of the opinion that 
the Sales Department was at fault. The committee has detailed 
this one exhibit, yet an analysis of the several exhibits, A, B, C, and 
D, mentioned above, proves not only inefficiency in method but a 
total lack of supervision by the men employed to supervise. 

With reference to the item, "Advances to be accounted for, Exhibit 
C," shown in the amount of $353,949.26, we are informed that there 
is likely to be returned to the corporation treasury only $14,609.20. 
In other words, the information as to the accounting for these 
advances has been received in the office of the Housing Corporation, 



UNITED STATES HOUSHSTG CORPORATIOIT. 41 

but has never been reflected on the books. This account should not 
show "Advances to be accounted for," but the expenditures already- 
made should long ago have been entered up and allocated to their 
proper divisions. 

With reference to allocations, the committee finds an item as part 
of the balance sheet of July 31, 1919, as follows: Construction pro- 
jects, $48,859,076.15. 

We find that in this item of construction projects, the corporation 
carries $254,716.90 of Pacific coast office expenses, and $288,768.31 
of Hampton Roads office expenses. These items as well as all other 
departmental expenses should have been shown separately on the 
books of the corporation, thereby giving the public a better idea of 
the overhead expenses of conducting the enterprise. 

The committee has been informally told that the item of $639,385.32, 
called " Engineering fees and expenses," as shown on the balance sheet 
of August 31, 1919, and concerning which we have commented under 
Point XVIII, contains some $60,000 of fees paid to contractors, which 
are not engineering fees at all. We can only say that we do not doubt it. 
We have also found that the fees and expenses of real estate negoti- 
ators, who negotiated at $50 per day, is not found in the "Cost of 
real estate" column, or in "Office salaries of the Real Estate Divis- 
ion," but is foimd in "Field payments of construction projects." 

Such allocations maj well reflect some shining glory to the economy 
of the Real Estate Division, or deflect some shadows from the top- 
heavy overhead expenses, but they are not at all enlightening to 
Congress or to the public, which must pay the score. 

XX. 

IMMENSITY OF PROGRAM. 

The Housing Corporation officials apparently gave no heed to the 
enacting clause of May 16, 1918, whicn recited "the President, for 
the purpose of providing industrial housing, * * * jg hereby 
authorized and empowered within the limits of the amount herein 
authorized." 

On page 392, volume 2, of Housing Corporation report of June 21, 
1919, there appears three columns of Table No. 1. Under the head- 
ing "Housing needs," we find a column called "Construction recom- 
mended by investigators," which reconunendations provide appar- 
ently for 24,539 families and 32,651 single workers. Of course this 
was only a recommendation. In a parallel column, however, we 
find "Housing program proposed, November 4, 1918," in which the 
number of families to be provided for is 24,970 (larger than .the num- 
ber recommended), and the single workers provided for 23,997. We 
would not conclude from this that definite plans had been made for 
such a vast program, did not a footnote with reference to the number 
of families say "includes 3,965 families on sites that have not been 
planned." Naturally then sites had been planned for the remainder, 
or 21,005 families. 

This is just three times the number provided for under the revised 
program of April 18, 1918. 

The number of single workers were also three times the number 
provided under the final program of April 18, 1918. 



42 UNITED STATES HOUSING CORPOEATION. 

Now, the construction cost as actually incurred for the program of 
April 18, 1918, was $50,000,000, but we are told that the cost of a 

Erogram involving housing three times as many people would not 
ave been three times S50,000,000. (See p. 310-311, this tr.). How- 
ever, if we take the average cost per family on the projects that have 
been appraised and take the figures of the cost as computed by Mr. 
McCuUough of the Housing Corporation, we find the average to be 
$5,673.78. (See p. 592-596, this tr.). To accomodate 21,005 alone 
would have cost $119,177,748.90. To accommodate 11,132 single 
women at the figure of $1,542.50, the cost as expended on the Wash- 
ington women's hotels (see p. 373, this tr.), would have cost $17,171,- 
110. To accommodate 12,865 single men at a cost of $685.95, which 
is the cost as expended on the navy yard barracks at Washington^ 
D. C. (see pp. 370-372, this tr.) , would have amounted to $8,824,746.75, 
making in all a contemplated expenditure of $145,173,605.65. 

The charge that the Housing Corporation had actually planned 
and incurred expenses in so planning, vastly beyond the limits of the 
appropriation act, has been amply sustained. 

XXI. 

NEGOTIATORS AT $50 PER DAT. 

We have mentioned the point not so much because the committee 
feels that the compensation was excessive as based upon the work 
accomplished but because the Real Estate Department has lauded 
its negotiators as ''patriotic." (See pp. 84, 85 this tr.) 

Many persons make and truly earn $50 a day. Nevertheless, this 
sum is of such substantial proportions that a person who drops his 
ordinary avocation for a few days only and works for the Government 
at $50 per day is not entitled in the absence of other evidence to be 
called "patriotic" or the department which secured his services 
efiicient. 

When the committee asked for a statement of the amount paid 
the negotiators, together with the number of days worked, the state- 
ment presented gave another illustration of inaccuracies discussed 
under point XVII. (See table, p. 694 this tr.) 

The column called "Amount of property acquired," against which 
a percentage was computed of 0.63 per cent, contained all property 
"negotiated for." Property of the Housing Corporation actually 
acquired and paid for is $3,697,392.61. (See table, p. 677 this tr.) 

Not only did the column on the Brigham exhibit contain prop- 
erties never contracted for but this column included also $1,157,- 
709.36 of, property negotiated for by members of the ofiice stajff of 
the real estate division whose compensation appears on the ojSice 
pay roU, but in making the percentage computation Mr. Brigham 
computed that at nothing. A careful examination of the table will 
show that the realtors were paid $29,825 for 596^ days' work. There 
were one or two gentlemen wiio contributed their services for nothing, 
being Messrs. Garland, Thorpe, and for a period Mr. Macomber, and 
these gentlemen are entitled to full credit for this service. 



UNITED STATES HOUSING CORPORATION. 43 

XXII. 

From the foregoing condemnation and indictment of the United 
States Housing Corporation it would appear that the committee 
had found no mitigating features in its accompHshments, This is 
not entirely true. 

We find in the Housing Corporation a large number of earnest 
young men and women seriously anxious to do what they could in the 
emergency and working for compensations not exceeding their 
usual earning capacity. 

We find that the Homes Registration Division in securing coopera- 
tion from the various localities, by which bureaus were opened in 
many congested cities for the listing of applicants for homes and of 
the existing vacant homes, accomplished a vast amount of creditable 
work. Naturally in a housing shortage it is necessary that it be 
made certain that all available houses are occupied. Each community 
must have its housing filled to the point of saturation. The work of 
the Homes Registration Division was very inexpensive. In a large 
number of cases they induced the local chamber of commerce, or the 
Boy Scouts, or the Y. M. C. A., or other similar organizations to 
furnish the workers, while the Homes Registration Division furnished 
the directions and established the system. But for their efforts 
many a homeless war worker would have been forced to leave con- 
gested communities where his labor was really imperatively needed. 

The efforts of the Housing Corporation to prevent rent profit- 
eering by the establishing of committees in each community to try 
profiteering landlords in the light of public opinion was also a unique 
and efficient method of checking this evil. 

This method of connecting the congested industrial communities 
with the unfilled residence communities by transportation was also 
commendable. In a large number of cases the town or community 
adjacent to a war center would be half deserted. Instead of building 
houses in the war center the adjacent community would be con- 
nected by establishing ferry service, additional train schedules, or 
otherwise, so that the workers could live in one place and reach their 
occupations in the other. This solved many a perplexing problem. 

Complaint of the rentals has been made by tenants of the Housing 
Corporation in three communities. 

Strangely- enough in each of these three cases the tenants are 
Government navy-yard employees. The committee has heard no 
complaint of rentals where the occupants of the houses are industrial 
workers of the civilian population. We find that in the main the 
rentals have been reasonable. 

The rentals were fixed with very little attention to the cost of the 
houses, which was proper. In the matter of renting, i. e., in fur- 
nishing accommodations to war workers, the Government should 
not have attempted and did not to pass on to the tenants, in the 
form of increased rentals, its own mistake of extravagant building. 

At VaUejo, Calif., the rental controversy is largel;^ due to a lack 
of frankness and openness in the attitude of the Housing Corporation 
officials. 

It is only fair where a committee feels, as does this one, that in 
exercising its major functions and in expenditure of the largest 



44 UNITED STATES HOUSING CORPORATION. 

amount of its appropriation poor judgment or none at all has been 
used, to point out those matters of which the committee approves. 

RECOMMENDATIONS. 

The committee feels it would fall far short of its duty to Congress 
did it not specifically recommend steps to be taken either to correct 
some of the abuses described, or to recover for the Government the 
sums of money found to be due. 

1. With reference tp Point VIII the committee recommends that the 
architects employed be called upon to give the committee an exact 
statement of the amount of their overhead expenditures as compared 
with the sum received to cover this expenditure. The architects were 
in no sense a party to any intentional violation of law. The com- 
mittee believes they will readily respond to a request for this informa- 
tion and that if actuated by the patriotic principles attributed to 
them they will refund the sums paid them in excess of the exact cost 
of overhead, this sum being the amount by which the contract 
violates the spirit and letter of the appropriating act. In the event 
the Government is not satisfied with the statement of the architect 
or in the event the architect refuses to give a statement, we recom- 
mend that suit be brought against the architect for the full amount 
paid him for overhead, against which he may, of course, offset his 
actual expenditures as shall be proven in court. The Government 
should recover at least $50,000. 

2. In the matter of profits by G. A. Fuller & Co., discussed under 
Point XI, we feel the demand should be made upon this company 
for this profit in the amount of $16,028.20, and in the event of failure 
to repay, civil suit should be brought. 

3. With respect to construction "extras," discussed under Point 
XII, we believe that all extras should be computed by experts from 
the department of the Supervising Architect of the Treasury not 
only from the plans and specifications but from the completed work 
itself, where necessary, and sums allowed in excess of the correct 
amount should be recovered from the subcontractors, and the excess 
fees from the general contractors, by civil suit, if necessary. 

4. With reference to the loan to the Springfield Consolidated 
Water Co., this company should be called upon immediately to reduce 
their loan by the amount of the sums applied to the payment of old 
accounts, rather than to extension of their equipment. The com- 
mittee believes, also, that all other loans to railroads, street railways, 
and other utility companies should be carefully scrutinized by the 
proper official of the Treasury Department, and where the security 
which the Government has received for these loans is not adequate, 
additional security should be immediately demanded, or, in lieu, an 
immediate reduction in the amount of the loan. 

5. With reference to nonexpendable property discussed under 
Point XVI, auditors of the Treasury Department should make an 
audit from the original vouchers of the total amount of property 
purchased which has been previously defined in Government account- 
ing as nonexpendable. All of this j)roperty should then be accounted 
for by the Housing Corporation either by sales receipts or by the 
presence of the property itself. For failure to account, the individuals 
accountable should be held liable at civil suit. In the event no 



UNITED STATES HOUSING CORPORATION". 45 

individual can be held liable, by reason of failure to require proper 
receipts or accountability, the dtirectors of the Housing Corporation 
should be held personally liable to the Government for the very gross 
negligence in this respect. 

6. With reference to the material misstatements discussed under 
Point XVII, the committee may only express a hope, and that is 
that widespread publicity be given in order to forever curb this 
tendency, which we have found not only in this report but cropping 
out at various times in other departmental documents, and also to 
forever check lack of care and veracity in testimony before official 
committees. 

7. In general, we feel that the existence of the Housing Corpora- 
tion is no longer essential to the best interests of the Government. 
We believe that what affairs remaining to be handled — sale of real 
estate, collections of loans — can better be handled by one or more 
other departments now existing than by this new agency, the Housing 
Corporation, and at a distinct saving in salaries to the Government. 

To meet this situation and the others above, we will introduce in 
the next few days proper and pointed legislation. 

Respectfully submitted. 

Bert M. Fernald, 
Henry F. Ashurst, 
Selden p. Spencer, 
Joseph I, France, 
Park Trammell, 

Subcommittee. 
Henry W. Keyes, 
Howard Sutherland, 
J. S. Frelinghuysen, 
Charles Curtis, 
Edward J. Gay, 
F. E. Warren, 



r J 




012 416 726 7 \ 



